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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
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Handle: RePEc:lmu:muenec:666
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