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Cross-Border Mergers and Acquisitions: On Revealed Comparative Advantage and Merger Waves

  • Steven Brakman
  • Harry Garretsen
  • Charles van Marrewijk

By combining two large data sets (on international trade flows and on mergers and acquisitions – M&As), we are able to test two implications of Neary’s (2003, 2004a) recent theoretical work. Analyzing M&As in a General Oligopolistic Equilibrium (GOLE) model incorporating strategic interaction between firms in a general equilibrium setting, we argue that: (i) M&As follow revealed comparative advantage as measured by the Balassa index, and (ii) M&As come in waves. We find convincing support for both hypotheses, thus showing for the first time that there is an empirical connection between export performance and mergers and acquisitions.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1602.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1602
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