‪In-Market vs. Cross-Border Merging: The Impact of Merger Policy‪

Jean-Marc Zogheib

Revue d'économie industrielle, 2018, vol. n° 164, issue 4, 107-129

Abstract: ?In this paper, we study how merger policy affects the choice between domestic and cross-border merger. We build a model where a firm chooses between these two types of mergers. While a domestic merger will be refused if it is anticompetitive, a cross-border merger has an uncertain ex-post profitability. We first study this tradeoff in a scenario where, after a non-profitable cross-border merger, exiting the foreign market through another merger is not possible. In this case, a more lenient merger policy discourages cross-border mergers relative to domestic mergers. However, if it is possible to exit through a domestic merger, this tradeoff is altered, as a more lenient merger policy lowers barriers to exit, thereby increasing the profitability of a cross-border merger. ? ?JEL classification: ? ?L22, L40, D21, G34? ?.?

Keywords: merger policy; in-market vs. cross-border mergers; exit (search for similar items in EconPapers)
JEL-codes: D21 G34 L22 L40 (search for similar items in EconPapers)
Date: 2018
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