Cross-border mergers and strategic alliances

Larry Qiu

European Economic Review, 2010, vol. 54, issue 6, 818-831

Abstract: This paper develops a model with distribution costs to study firm cooperation in forming strategic alliances and mergers, under different types of foreign market entry modes, that is, export or foreign direct investment (FDI). Under both export and FDI, we find that cross-border alliances (mergers) dominate domestic alliances (mergers); and cross-border alliances and mergers are preferred to independence if and only if distribution cost is high. Under export, cross-border alliances are chosen in equilibrium if distribution cost is high. Under FDI and with high distribution cost, cross-border alliances (mergers) are chosen in equilibrium if plant setup cost is low (high).

Keywords: Cross-border; strategic; alliances; Cross-border; mergers; Export; FDI; Distribution; costs (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:54:y:2010:i:6:p:818-831

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