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Strategic policy and international economic integration

  • José J. Sempere Monerris

    ()

    (Universitat de València)

  • Rafael Moner Colonques

    ()

    (Universitat de València)

  • Amparo Urbano Salvador

    (Universitat de València)

In a context of economic integration, we analyse the strategic effect of wo policies: merger policy and state aid policy. When governments play a Stackelberg policy game before firms compete in the market we find that: a) only under certain conditions, the leader country chooses a merger policy and, b) there is a policy equivalence in welfare terms for the follower. A centralised policy decision is welfare improving relative to the strategic policy game and equals total welfare of the area under autarky. Besides, there always exists a social incentive to propose mergers and both, the state aid level and the state aid expenditure, are lower.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-1999-05.pdf
File Function: Fisrt version / Primera version, 1999
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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1999-05.

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Length: 34 pages
Date of creation: Apr 1999
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:1999-05
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  1. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-27, March.
  2. White, Lawrence J, 1987. "Antitrust and Merger Policy: A Review and Critique," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 13-22, Fall.
  3. Fisher, Franklin M, 1987. "Horizontal Mergers: Triage and Treatment," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 23-40, Fall.
  4. Markusen, James R. & Venables, Anthony J., 1988. "Trade policy with increasing returns and imperfect competition : Contradictory results from competing assumptions," Journal of International Economics, Elsevier, vol. 24(3-4), pages 299-316, May.
  5. James A. Brander & Paul Krugman, 1983. "A 'Reciprocal Dumping' Model of International Trade," NBER Working Papers 1194, National Bureau of Economic Research, Inc.
  6. Neven, Damien J, 1994. "The Political Economy of State Aids in the European Community: Some Econometric Evidence," CEPR Discussion Papers 945, C.E.P.R. Discussion Papers.
  7. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
  8. Joseph Farrell and Carl Shapiro., 1988. "Horizontal Mergers: An Equilibrium Analysis," Economics Working Papers 8880, University of California at Berkeley.
  9. André Sapir & Pierre Buigues & Alexis Jacquemin, 1995. "European policies on competition, trade and industry: conflict and complementaries," ULB Institutional Repository 2013/8082, ULB -- Universite Libre de Bruxelles.
  10. Barros, Pedro P. & Cabral, Luis, 1994. "Merger policy in open economies," European Economic Review, Elsevier, vol. 38(5), pages 1041-1055, May.
  11. Smith, Alasdair & Venables, Anthony J, 1988. "Completing the Internal Market in the European Community: Some Industry Simulations," CEPR Discussion Papers 233, C.E.P.R. Discussion Papers.
  12. Schmalensee, Richard, 1987. "Horizontal Merger Policy: Problems and Changes," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 41-54, Fall.
  13. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
  14. Russell Cooper & Raymond Riezman, 2013. "Uncertainty and the Choice of Trade Policy in Oligopolistic Industries," World Scientific Book Chapters, in: International Trade Agreements and Political Economy, chapter 16, pages 287-298 World Scientific Publishing Co. Pte. Ltd..
  15. Jacquemin, Alexis, 1990. "Horizontal concentration and European merger policy," European Economic Review, Elsevier, vol. 34(2-3), pages 539-550, May.
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