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Cross-Border Merger Waves

Helder Vasconcelos () and Eileen Fumagalli

No 5601, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper proposes a sequential merger formation game with cost synergies to study how trade policy can influence firms' choice between domestic and cross-border mergers in an international Cournot oligopoly. We find that the equilibrium market structure depends heavily on: (i) the level of trade costs; and (ii) whether or not active antitrust authorities are incorporated within the sequential merger game. In addition, it is shown that whenever mergers occur in equilibrium, they occur in waves and the merger wave comprises at least one cross-border merger. We also analyze how the equilibrium market structures are affected by the presence of lobbying efforts.

Keywords: Endogenous mergers; Merger waves; Tariff-jumping fdi (search for similar items in EconPapers)
JEL-codes: F10 F13 L13 L41 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-com, nep-fmk, nep-ind and nep-int
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