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The Effects of Domestic Mergers on Exports: A Case Study of the 1998 Korean Automobile Industry

Hiroshi Ohashi () and Yuta Toyama
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Yuta Toyama: Department of Economics, The University of Tokyo

No CIRJE-F-974, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper examines the economic consequences of a horizontal merger between Korean automakers that took place in 1998, with a particular emphasis on export market behavior. Estimates of structural demand and supply reveal that the merger enhanced production efficiency of the merged party by 6.3 percent. Simulations, based on these estimates, indicate that while the merger increased domestic prices, it also tripled the export volume of the merged party. Moreover, the e ects of the merger are found to di er by auto model according to the model's pre-merger export status. It is shown that efficiency gains from the merger are likely to increase export volumes for models that were already exported prior to the merger, and to o set domestic market power for those that were not exported even after the merger. Finally, the paper compares the actual merger's e ects to those of an alternative counterfactual merger, nding that the actual merger brought greater bene ts to producers and fewer to domestic consumers. --

Pages: 47pages
Date: 2015-05
New Economics Papers: this item is included in nep-com and nep-ind
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Journal Article: The effects of domestic merger on exports: A case study of the 1998 Korean automobile industry (2017) Downloads
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