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

  • Joseph A. Clougherty
  • Anming Zhang

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.

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Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number SP II 2004-10.

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Length: 44 pages
Date of creation: Jun 2004
Date of revision:
Publication status: Published in Canadian Journal of Economics , Vol. 38(3), 2005, pp. 778-806.
Handle: RePEc:wzb:wzebiv:spii2004-10
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