Export Orientation and Domestic Merger Policy: Theory and Some Empirical Evidence
Joseph A. Clougherty
University of Illinois at Urbana-Champaign; Centre for Economic Policy Research (CEPR)
University of British Columbia - Sauder School of Business
Canadian Journal of Economics, Vol. 38, No. 3, pp. 778-806, August 2005
Recent 'open-economy industrial organization' literature finds export orientation enhances the weight of post-merger international competitive gains, favouring lenient domestic merger policy. However, mergers seldom generate the 'significant synergies' supportive of international competitive gains. Since a joint-economies-of-production effect suggests domestic mergers tend to generate international competitive losses (not gains), export orientation favours strict (not lenient) domestic merger policy. We show how non-synergistic domestic mergers in the presence of international sales might reduce national welfare and incur stringent merger reviews. A panel data set of U.S. merger policy by manufacturing sector, 1990-2001, empirically supports export orientation, leading to strict merger policy.
Number of Pages in PDF File: 29
JEL Classification: L40, F10Accepted Paper Series
Date posted: August 7, 2005
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