The search for trading partners and the cross-border merger decision

Terence Edwards and Ben Ferrett

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: We investigate the merger decision between two firms in an outsourcing relationship, one upstream and the other downstream. The inter-firm relationship is subject both to ex ante matching uncertainty and to contractual efficiency issues. Cross-border merger is assumed to solve the latter problem, but at the expense of curtailing the match-searching process. The trade-off between these two factors is assumed to determine the dynamics of foreign direct investment in this kind of industry.

Keywords: Trade; search; outsourcing; merger. (search for similar items in EconPapers)
JEL-codes: F12 F23 (search for similar items in EconPapers)
Date: 2009-10, Revised 2009-10
New Economics Papers: this item is included in nep-com and nep-ind
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Citations: View citations in EconPapers (1)

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