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Cross-Border Mergers & Acquisitions and the Role of Trade Costs

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  • Görg, Holger
  • Hijzen, Alexander
  • Manchin, Miriam

Abstract

Cross-border mergers and acquisitions (M&As) have increased dramatically over the last two decades. This paper analyses the role of trade costs in explaining the increase in the number of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&As and investigate whether trade costs affect these two types of mergers differently. We analyse this question using industry data for 23 OECD countries for the period 1990-2001. Our findings suggest that while in the aggregate trade costs affect cross-border merger activity negatively its impact differs importantly across horizontal and non-horizontal mergers. The impact of trade costs is less negative for horizontal mergers, which is consistent with the tariff-jumping argument.

Suggested Citation

  • Görg, Holger & Hijzen, Alexander & Manchin, Miriam, 2007. "Cross-Border Mergers & Acquisitions and the Role of Trade Costs," CEPR Discussion Papers 6397, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6397
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    Cited by:

    1. Elena Maggi & Ilaria Mariotti, 2009. "Logistics FDI in Italy: integration strategies and motivation," Working Papers 0902, SIET Società Italiana di Economia dei Trasporti e della Logistica.

    More about this item

    Keywords

    FDI; gravity; mergers and acquisitions; trade costs;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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