A Political Economy Model of Merger Policy in International Markets
Universitat Pompeu Fabra
Economic Research Division, WTO; Columbia Business School - Economics Department; International Monetary Fund (IMF)
Economica, Vol. 79, Issue 313, pp. 115-136, 2012
This paper looks at the political economy of merger policy under autarky and in international markets. We assume that merger policy is decided by antitrust authorities — whose objective is to maximize welfare — but can be influenced by governments, which are subject to lobbying by firms (insiders or outsiders to the merger). We argue that political economy distortions may explain some of the recently observed merger policy conflicts between authorities and politicians, as well as between institutions belonging to different countries. We illustrate our analysis with applications motivated by recent merger cases that have been widely debated in the international press.
Number of Pages in PDF File: 22
Date posted: December 15, 2011