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Merger Policy to Promote Global Players? A Simple Model

  • Haufler, Andreas
  • Nielsen, Søren Bo

We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyze under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies enacted by a national merger authority tend to be overly restrictive from a global efficiency perspective. In contrast, all international mergers that benefit the merging firms will be cleared by either a national or a regional regulator, and this laissez-faire approach is also globally efficient. Finally, we derive the properties of the endogenous merger equilibrium.

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Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 666.

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Date of creation: Jul 2005
Handle: RePEc:lmu:muenec:666
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  1. Horn, Henrik & Levinsohn, James A, 2000. "Merger Policies And Trade Liberalization," CEPR Discussion Papers 2459, C.E.P.R. Discussion Papers.
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  8. Röller, Lars-Hendrik & Stennek, Johan & Verboven, Frank, 2000. "Efficiency Gains from Mergers," Working Paper Series 543, Research Institute of Industrial Economics.
  9. Huck, S. & Konrad, K.A. & Müller, W., 2005. "Merger Without Costs Advantage," Discussion Paper 2005-019, Tilburg University, Tilburg Law and Economic Center.
  10. 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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  12. Joseph A. Clougherty, 2003. "Industry Trade-Balance and Domestic Merger Policy: Some Empirical Evidence from the U.S," CIG Working Papers SP II 2003-19, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  13. Joseph Farrell and Carl Shapiro., 1988. "Horizontal Mergers: An Equilibrium Analysis," Economics Working Papers 8880, University of California at Berkeley.
  14. Lommerud, K.E. & Sorgard, L., 1997. "Merger and Product Range Rivalery," Norway; Department of Economics, University of Bergen 165, Department of Economics, University of Bergen.
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  17. Hans-Werner Sinn, 2002. "Fusion E.ON-Ruhrgas : die volkswirtschaftlichen Aspekte ; die für die Entscheidung des Bundesministers für Wirtschaft und Technologie relevanten volkswirtschaftlichen Aspekte beim Zusammenschlussvorha," ifo Forschungsberichte, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 9.
  18. Horn, Henrik & Persson, Lars, 1999. "The Equilibrium Ownership of an International Oligopoly," CEPR Discussion Papers 2302, C.E.P.R. Discussion Papers.
  19. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
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