Merger Profitability and Trade Policy

Steffen Huck and Kai Konrad

Scandinavian Journal of Economics, 2004, vol. 106, issue 1, 107-122

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

Date: 2004
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https://doi.org/10.1111/j.0347-0520.2004.t01-1-00350.x

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Working Paper: Merger profitability and trade policy (2001)
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