International Mergers and Welfare under Decentralized Competition Policy

Keith Head and John Ries ()

Canadian Journal of Economics, 1997, vol. 30, issue 4, 1104-23

Abstract: In this paper, the authors investigate the welfare consequences of horizontal mergers and other production relationships between firms based in different nations. They specify the critical share of consumption a nation must represent to veto mergers that raise price and reduce world welfare. The authors show that, when mergers do not generate costs saving, it will be in the national interest for existing competition agencies to block most world welfare-reducing combinations. When mergers generate cost savings, national welfare-maximizing regulators cannot be relied upon to prevent mergers that lower world welfare.

Date: 1997
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