Cross-Border Mergers as Instruments of Comparative Advantage

J. Peter Neary ()

No 4325, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A two-country model of oligopoly in general equilibrium is used to show how changes in market structure accompany the process of trade and capital market liberalisation. The model predicts that bilateral mergers in which low-cost firms buy out higher-cost foreign rivals are profitable under Cournot competition. With symmetric countries, welfare may rise or fall, though the distribution of income always shifts towards profits. The model implies that trade liberalisation can trigger international merger waves, in the process encouraging countries to specialise and trade more in accordance with comparative advantage.

Keywords: comparative advantage; cross-border mergers; GOLE (General Oligopolistic Equilibrium); market integration; merger waves (search for similar items in EconPapers)
JEL-codes: F10 F12 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
Date: 2004-03
View citations in EconPapers

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP4325.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Cross-Border Mergers as Instruments of Comparative Advantage (2004)
Working Paper: Cross-Border Mergers as Instruments of Comparative Advantage (2004)
Journal Article: Cross-Border Mergers as Instruments of Comparative Advantage (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:4325

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP4325.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Series data maintained by ().