National Champions and Globalization
28 Pages Posted: 20 Jan 2010
Abstract
Inthis paper, we offer an explanationwhy globalization (falling trade costs) may increase the government incentive to block foreign takeover of domestic firms and increase its incentive to allow mergers among national firms. This creation of ‘national champions’ occurs not only because the government may have a bias against foreign takeover, but also because consumer welfare gains associated with foreign acquisitions decrease with globalization. Endogenizing the government bias through lobbying efforts of the domestic firms, the paper shows that the bias does not need to be very strong before the government promotes domestic champions provided that barriers to trade are low.
Champions nationaux et mondialisation. Dans ce m´emoire, on offre une explication de pourquoi la mondialisation (coˆ uts de commerce en d´eclin) peut accroˆıtre la propension du gouvernement `a bloquer la prise de contrˆ ole de firmes domestiques par des int´erˆets ´etrangers et la propension `a permettre des fusions de firmes nationales. Cette cr´eation de champions nationaux se produit non seulement parce que le gouvernement a un malaise face aux prises de contrˆ ole par des int´erˆets ´etrangers, mais aussi parce que les gains de bien-ˆetre des consommateurs associ´es aux acquisitions par des int´erˆets ´etrangers d´ecroˆıssent avec la mondialisation. En endog´en´eisant ce malaise du gouvernement attribuable au lobbying des firmes domestiques, on montre que ce malaise n’a pas besoin d’ˆetre tr`es fort pour que le gouvernement promeuve les champions nationaux `a condition que les barri`eres commerciales soient faibles.
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