National champions and globalization

Jens Südekum
Authors registered in the RePEc Author Service: Jens Suedekum

Canadian Journal of Economics, 2010, vol. 43, issue 1, 204-231

Abstract: In this paper, we offer an explanation why globalization (falling trade costs) may increase the government incentive to block foreign takeover of domestic firms and increase its incentive to allow mergers among national firms. This creation of `national champions' occurs not only because the government may have a bias against foreign takeover, but also because consumer welfare gains associated with foreign acquisitions decrease with globalization. Endogenizing the government bias through lobbying efforts of the domestic firms, the paper shows that the bias does not need to be very strong before the government promotes domestic champions provided that barriers to trade are low.

JEL-codes: F12 F23 L13 L52 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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