Cross-Border Mergers and Market Segmentation
Amrita Ray Chaudhuri
University of Winnipeg - Department of Economics; Tilburg University - Center and Faculty of Economics and Business Administration; Tilburg Law and Economics Center (TILEC)
October 19, 2011
CentER Discussion Paper Series No. 2011-112
TILEC Discussion Paper No. 2011-047
This paper shows that cross-border mergers are more likely to occur in industries which serve multiple segmented markets rather than a single integrated market, given that cost functions are strictly convex. The product price rises in the market where an acquisition is made but falls in the other, decreasing the acquisition price of other firms (in contrast to the results in the existing merger literature on integrated markets). Although the sum of consumer surplus across the countries may rise in response to a given acquisition, one of the countries gains at the expense of the other.
Number of Pages in PDF File: 33
Keywords: cross-border mergers, endogenous mergers, competition policy, Cournot competition
JEL Classification: L12, L40, L41, F15, F23
Date posted: September 3, 2010 ; Last revised: October 26, 2011
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