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Export Orientation and Domestic Merger Policy: Theory and Some Empirical Evidence

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  • Joseph A. Clougherty
  • Anming Zhang

Abstract

The recent 'open-economy industrial organization' literature generally finds export-orientation to enhance the weight of post-merger international competitive gains; thereby, favoring lenient domestic merger policy. We observe, however, that mergers seldom generate the ‘significant synergies’ that are supportive of international competitive gains. Further, we explore a joint-economies of production effect which suggests that domestic mergers tend to generate international competitive losses (not gains). Accordingly, we contend that export-orientation favors strict (not lenient) domestic merger policy. In order to support this contention, we develop a model illustrative of how non-synergistic domestic mergers in the presence of international sales might reduce national welfare and incur stringent merger-reviews. Further, using a panel data set composed of U.S. merger policy by manufacturing sector over the 1990-2001 period, we empirically support export-orientation leading to strict merger policy. ZUSAMMENFASSUNG - (Exportorientierung und nationale Fusionspolitik: Theorie und empirische Belege) In der neueren Literatur zur Industrieökonomie in offenen Volkswirtschaften wird allgemein herausgestellt, dass die Zunahme internationaler Wettbewerbs-vorteile durch eine Fusion umso stärker ins Gewicht fällt, je höher die Exportorientierung der Volkswirtschaft ist. Mithin wird eine nachsichtige nationale Fusionskontrolle befürwortet. Im Gegensatz dazu stellen wir fest, dass Unternehmenszusammenschlüsse oft nicht die beabsichtigten signifi-kanten Synergieeffekte haben, die die internationale Wettbewerbsfähigkeit des Unternehmens tatsächlich stärken würden. Stattdessen führen Fusionen eher zu internationalen Wettbewerbsnachteilen. Eine Ursache dafür finden wir im "joint economies of production - Effekt", den wir hier näher untersuchen. Entsprechend kommen wir zu der Auffassung, dass die Exportorientierung einer Volkswirtschaft statt für eine nachsichtige eher für eine strenge Fusions-kontrolle spricht. Das von uns entwickelte Modell veranschaulicht, wie Fusionen von Unter-nehmen, bei denen der Synergieeffekt ausbleibt, in einer offenen Volkswirt-schaft die Wohlfahrt des Landes reduzieren, und lässt erkennen, dass diese Auswirkungen strengere Fusionsprüfungen nahe legen. Auch empirisch belegen wir unsere These über den Zusammenhang von Exportorientierung und strengerer Fusionspolitik anhand von Paneldaten der Jahre 1990-2001, in denen die US-amerikanischen Fusionsentscheidungen nach den Sektoren des produzierenden Gewerbes geordnet zusammengefasst sind.

Suggested Citation

  • Joseph A. Clougherty & Anming Zhang, 2004. "Export Orientation and Domestic Merger Policy: Theory and Some Empirical Evidence," CIG Working Papers SP II 2004-10, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  • Handle: RePEc:wzb:wzebiv:spii2004-10
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    References listed on IDEAS

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    Cited by:

    1. Marina Tsygankova, "undated". "The Export of Russian Gas to Europe: Breaking Up the Monopoly of Gazprom," Energy and Environmental Modeling 2007 24000062, EcoMod.
    2. Joseph A. Clougherty & Anming Zhang, 2009. "Domestic rivalry and export performance: theory and evidence from international airline markets," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 440-468, May.
    3. Joseph Clougherty, 2010. "Competition Policy Trends and Economic Growth: Cross-National Empirical Evidence," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 17(1), pages 111-127.
    4. repec:eee:inecon:v:107:y:2017:i:c:p:147-164 is not listed on IDEAS
    5. Ohashi, Hiroshi & Toyama, Yuta, 2017. "The effects of domestic merger on exports: A case study of the 1998 Korean automobile industry," Journal of International Economics, Elsevier, vol. 107(C), pages 147-164.
    6. Marjit, Sugata & Ray, Moushakhi, 2017. "Export profitability, competition and technology," International Review of Economics & Finance, Elsevier, vol. 47(C), pages 35-45.
    7. Tsygankova, Marina, 2012. "An evaluation of alternative scenarios for the Gazprom monopoly of Russian gas exports," Energy Economics, Elsevier, vol. 34(1), pages 153-161.

    More about this item

    Keywords

    open-economy; merger-policy; export-orientation; antitrust;

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • F10 - International Economics - - Trade - - - General

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