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Merger Policy to Promote Global Players? A Simple Model

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  • Haufler, Andreas
  • Nielsen, Søren Bo

Abstract

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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File URL: https://epub.ub.uni-muenchen.de/666/1/Haufler_666.pdf
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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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Keywords: merger policy; international trade;

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Find related papers by JEL classification:
  • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
  • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
  • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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  1. Levin, Dan, 1990. "Horizontal Mergers: The 50-Percent Benchmark," American Economic Review, American Economic Association, vol. 80(5), pages 1238-45, December.
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  7. Horn, Henrik & Persson, Lars, 2001. "The equilibrium ownership of an international oligopoly," Journal of International Economics, Elsevier, vol. 53(2), pages 307-333, April.
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  18. Mark Rysman, 2000. "Competition Policy as Strategic Trade," Papers 0100, Boston University - Industry Studies Programme.
  19. 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.
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Cited by:

  1. Francesc Trillas, 2008. "Regulatory federalism in network industries," Working Papers 2008/8, Institut d'Economia de Barcelona (IEB).
  2. Kai Konrad & Stergios Skaperdas, 2012. "The market for protection and the origin of the state," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 417-443, June.
  3. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2008. "Mergers and capital flight in unionised oligopolies: Is there scope for a 'national champion' policy?," Working Papers in Economics 02/08, University of Bergen, Department of Economics.
  4. Haufler, Andreas & Schulte, Christian, 2007. "Merger Policy and Tax Competition," Discussion Papers in Economics 2074, University of Munich, Department of Economics.
  5. Santos-Pinto, Luís, 2009. "The Impact of Firm Size and Market Size Asymmetries on National Mergers in a Three-Country Model," MPRA Paper 17166, University Library of Munich, Germany.
  6. Haufler, Andreas & Schulte, Christian, 2011. "Merger policy and tax competition: The role of foreign firm ownership," Munich Reprints in Economics 20413, University of Munich, Department of Economics.
  7. Kjell Lommerud & Trond Olsen & Odd Straume, 2010. "Company Taxation and Merger Incentives in International Oligopoly: on International Policy Coordination with Strategic Trade," Journal of Industry, Competition and Trade, Springer, vol. 10(2), pages 161-186, June.
  8. Santos-Pinto, Luís, 2010. "The impact of firm cost and market size asymmetries on national mergers in a three-country model," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 682-694, November.
  9. Johannes Becker & Clemens Fuest, 2007. "Taxing Foreign Profits with International Mergers and Acquisitions," Working Papers 0719, Oxford University Centre for Business Taxation.
  10. Lommerud, Kjell Erik & Olsen, Trond E. & Straume, Odd Rune, 2006. "Cross border mergers and strategic trade policy with two-part taxation: is international policy coordination beneficial?
    [Grenzüberschreitende Fusionen und strategische Handelspolitik mit zweiseiti    ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2006-24, Social Science Research Center Berlin (WZB).
  11. Johannes Becker & Clemens Fuest, 2008. "Tax Competition – Greenfield Investment versus Mergers and Acquisitions," CESifo Working Paper Series 2247, CESifo Group Munich.
  12. Johannes Becker & Clemens Fuest, 2007. "Corporate Tax Policy and International Mergers and Acquisitions – Is the Tax Exemption System Superior?," CESifo Working Paper Series 1884, CESifo Group Munich.

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