Merger Policy to Promote 'Global Players'? A Simple Model
University of Munich - Seminar for Economic Policy; CESifo (Center for Economic Studies and Ifo Institute)
Søren Bo Nielsen
affiliation not provided to SSRN
Oxford Economic Papers, Vol. 60, Issue 3, pp. 517-545, 2008
We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyse under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies enacted by a national merger authority tend to be overly restrictive from a global efficiency perspective. In contrast, all international mergers that benefit the merging firms will be cleared by either a national or a regional regulator, and this laissez-faire approach is also globally efficient. Finally, we allow for multiple mergers and analyse whether national mergers, international mergers or no mergers will be the equilibrium market structure when the firms' decisions to merge are either taken non-cooperatively or cooperatively.
JEL Classification: L41, F13, H77
Date posted: July 2, 2008
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