The Impact of Firm Size and Market Size Asymmetries on National Mergers in a Three-Country Model

Luis Santos-Pinto ()

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: This paper studies the impact of firm and market size asymmetries on merger decisions. To do that I consider a model where a small and a large country compete in a third (world) market. Each of the two countries has two firms (with potentially different costs) that supply the domestic market and export to the third market. Merger decisions in the two countries are modeled as a simultaneously move game. The paper finds that firms in the large country have more incentives to merge than firms in the small country. In contrast, the government of the large country has more incentives to block a merger than the government of the small country. Thus, the model predicts that conflicts of interest between governments and firms concerning national mergers are more likely in large countries than in small ones.

Keywords: mergers; international trade; merger policy; size asymmetry (search for similar items in EconPapers)
JEL-codes: F13 H77 L11 L41 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2009-02
New Economics Papers: this item is included in nep-com
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Published under the title "The Impact of Firm Cost and Market Size Asymmetries on National Mergers in a Three-Country Model", in International Journal of Industrial Organization, 28(6), November 2010, pp. 682-694

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Related works:
Working Paper: The Impact of Firm Size and Market Size Asymmetries on National Mergers in a Three-Country Model (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:09.06

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