Strategic Trade Policy and Merger Profitability

Steffen Huck and Kai A. Konrad ()

No CESifo Working Paper No. 948, CESifo Working Paper Series from CESifo Group Munich

Abstract: We study the profitability incentives of merger and the endogenous industry structure in a strategic trade policy environment. Merger changes the strategic trade policy equilibrium. We show that merger can be profitable and welfare enhancing here, even though it would not be profitable in a laissez-faire economy. A key element is the change in the governments. incentives to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger does not.

Keywords: merger incentives; strategic trade policy (search for similar items in EconPapers)
JEL-codes: D43 D44 F12 L11 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
Date: 2003
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