Strategic Trade Policy and Merger Profitability

Steffen Huck and Kai Konrad

No 948, CESifo Working Paper Series from CESifo

Abstract: We study the profitability incentives of 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 here, even though it would not be profitable in a laissez-faire economy. A key element is the change in the governments. incentives to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger does not.

Keywords: merger incentives; strategic trade policy (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (2)

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