Private and Public Incentives for Mergers in the Face of Foreign Entry

Ryan Fang and Martin Richardson

Chapter 13 in Dimensions of Trade Policy, 2017, pp 263-282 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We consider private and public incentives for domestic firms to merge in the face of foreign entry. We consider the gains to two merging firms and to national welfare in a linear Cournot model. With heterogeneous firms and possible synergies, greater foreign entry tends to enhance both private and public incentives for domestic mergers. Thus, policymakers have no cause to doubt the intentions of firms seeking to merge: when it is in the firms’ interests then it is also in the public interest. However, at least for certain parameterisations, private gains from mergers become positive at a lower level of foreign entry than do public gains. This suggests that private firms may have an incentive to overstate the degree of foreign competition they anticipate facing — for example, after liberalizing foreign investment rules — to persuade policymakers that a proposed domestic merger is in the national interest.

Keywords: Trade Policy; Preferential Trading Agreements; Content Protection; Parallel Imports (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789813207615_0013 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789813207615_0013 (text/html)
Ebook Access is available upon purchase.

Related works:
Journal Article: Private and Public Incentives for Mergers in the Face of Foreign Entry (2010)
Working Paper: Private and public incentives for mergers in the face of foreign entry (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789813207615_0013

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().