Cross-border Mergers and Acquisitions: On Revealed Comparative Advantage And Merger Waves

Steven Brakman (), Harry Garretsen and Charles Marrewijk
Additional contact information
Steven Brakman: University of Groningen

No 08-013/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: By combining two large data sets (on international trade flows and cross-border mergers and acquisitions – M&As), we test two implications of Neary’s (2003, 2007) general oligopolistic equilibrium (GOLE) model (incorporating strategic interaction between firms in a general equilibrium setting). In terms of economic importance, the dominant merger wave variable is a positive global-all effect, indicating that M&A waves are an economy-wide, global phenomenon. Country-specific merger wave variables are of secundary importance. In accordance with the bilateral GOLE model as specified by Neary, we find strong evidence that acquiring firms operate in strong sectors. However, we also find (less pronounced) evidence that target firms are active in strong, not weak sectors, which we label the ‘target paradox’. We show how a multi-country extension of the GOLE model that allows for firm heterogeneity can explain this target paradox.

Keywords: Comparative Advantage; Cross-border Mergers and Acquisitions; Merger Waves; General Oligopolistic Equilibrium Trade Model (search for similar items in EconPapers)
JEL-codes: F10 F12 L13 (search for similar items in EconPapers)
Date: 2007-01-25
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://papers.tinbergen.nl/08013.pdf (application/pdf)

Related works:
Working Paper: Cross-Border Mergers and Acquisitions: On Revealed Comparative Advantage and Merger Waves (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20080013

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().