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Gains from Multinational Competition for Cross-Border Firm Acquisition

Onur Koska ()

No 1801, ERC Working Papers from ERC - Economic Research Center, Middle East Technical University

Abstract: This study shows that when there is multinational competition for foreign acquisition, the strategic use of a consumer welfare argument in regulating foreign market entry leads to a preemptive foreign acquisition. Even under fierce competition, foreign acquisition will emerge as part of a non-cooperative equilibrium (although multinationals would have gained more had they been able to credibly commit to a cooperative equilibrium of independent foreign sales, either via greenfield investment or trade under complete liberalization) which increases local welfare by more than both the case without foreign market entry and the case with foreign market entry via independent foreign sales.

Keywords: Cross-Border Firm Acquisitions; Foreign Market Entry Regulations; Greenfield Investment; Trade; Consumer Welfare (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-int and nep-mkt
Date: 2018-01, Revised 2018-01
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http://erc.metu.edu.tr/en/system/files/menu/series18/1801.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: Gains from multinational competition for cross-border firm acquisition (2019) Downloads
Working Paper: Gains from multinational competition for crossborder firm acquisition (2018) Downloads
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