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Merger Policy and Tax Competition

  • Andreas Haufler
  • Christian Schulte

In many situations governments have sector-specific tax and regulation poli- cies at their disposal to in°uence the market outcome after a national or an international merger has taken place. In this paper we study the implications for merger policy when countries non-cooperatively deploy production-based taxes. We find that whether national or international mergers are more likely to be en- acted in the presence of nationally optimal tax policies depends crucially on the ownership structure of firms. When all firms are owned domestically in the pre- merger situation, non-cooperative tax policies are more efficient in the national merger case and smaller synergy effects are needed for this type of merger to be proposed and cleared. These results are reversed when there is a high degree of foreign firm ownership prior to the merger.

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File URL: http://www.bgpe.de/texte/DP/035_haufler_schulte.pdf
File Function: First version, 2007
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Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 035.

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Length: 35 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:bav:wpaper:035_haufler_schulte
Contact details of provider: Web page: http://www.bgpe.de/

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  8. Haufler, Andreas & Nielsen, Søren Bo, 2005. "Merger Policy to Promote Global Players? A Simple Model," Discussion Papers in Economics 666, University of Munich, Department of Economics.
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  10. Lars-Hendrik Röller & Johan Stennek & Frank Verboven, 2000. "Efficiency Gains from Mergers," CIG Working Papers FS IV 00-09, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  11. Huizinga, Harry & Nicodeme, Gaetan, 2006. "Foreign ownership and corporate income taxation: An empirical evaluation," European Economic Review, Elsevier, vol. 50(5), pages 1223-1244, July.
  12. Norback, Pehr-Johan & Persson, Lars, 2007. "Investment liberalization -- Why a restrictive cross-border merger policy can be counterproductive," Journal of International Economics, Elsevier, vol. 72(2), pages 366-380, July.
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  17. Keith Head & John Ries, 1997. "International Mergers and Welfare under Decentralized Competition Policy," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 1104-23, November.
  18. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu & Christine Zulehner, 2001. "The Effects of Mergers: An International Comparison," CIG Working Papers FS IV 01-21, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
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  21. Focarelli, Dario & Pozzolo, Alberto Franco, 2001. "The patterns of cross-border bank mergers and shareholdings in OECD countries," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2305-2337, December.
  22. Johannes Becker & Clemens Fuest, 2007. "Corporate Tax Policy and International Mergers and Acquisitions – Is the Tax Exemption System Superior?," CESifo Working Paper Series 1884, CESifo Group Munich.
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  25. Lommerud, Kjell Erik & Straume, Odd Rune & Sørgard, Lars, 2003. "National versus international mergers in unionised oligopoly," Working Papers in Economics 12/03, University of Bergen, Department of Economics.
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  27. Richardson, Martin, 1999. "Trade and Competition Policies: Concordia Discors?," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 649-64, October.
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