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The search for trading partners and the cross-border merger decision

Author

Listed:
  • T.Huw Edwards

    () (Dept of Economics, Loughborough University)

  • Ben Ferrett

    () (Dept of Economics, Loughborough University)

Abstract

We investigate the merger decision between two firms in an outsourcing relationship, one upstream and the other downstream. The inter-firm relationship is subject both to ex ante matching uncertainty and to contractual efficiency issues. Cross-border merger is assumed to solve the latter problem, but at the expense of curtailing the match-searching process. The trade-off between these two factors is assumed to determine the dynamics of foreign direct investment in this kind of industry.

Suggested Citation

  • T.Huw Edwards & Ben Ferrett, 2009. "The search for trading partners and the cross-border merger decision," Discussion Paper Series 2009_15, Department of Economics, Loughborough University, revised Oct 2009.
  • Handle: RePEc:lbo:lbowps:2009_15
    as

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    File URL: http://www.lboro.ac.uk/departments/sbe/RePEc/lbo/lbowps/templateedandfer_wp.pdf
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    References listed on IDEAS

    as
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    19. Gene M. Grossman & Elhanan Helpman, 2002. "Integration versus Outsourcing in Industry Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 85-120.
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    Cited by:

    1. T.Huw Edwards, 2014. "Good times and bad times, with endogenous trade policy responses," Discussion Paper Series 2014_10, Department of Economics, Loughborough University, revised Oct 2014.

    More about this item

    Keywords

    Trade; search; outsourcing; merger.;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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