On the International Linkages between Trade and Merger Policies

14 Pages Posted: 8 May 2006

See all articles by Kamal Saggi

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics

Halis Murat Yildiz

Ryerson University - Economics and Management Science

Abstract

In a three-country model, this paper investigates linkages between merger incentives of exporting firms and the trade policy of an importing country. When exporting firms come from only one country, the tariff response of the importing country reverses the welfare effects of a merger in the exporting country. If there exist two exporting countries, a merger creates two types of conflicting international externalities. First, a merger in one exporting country increases profits of all firms. Secondly, non-merged firms lose if the importing country is free to raise its tariff in response to a merger of foreign exporters.

Suggested Citation

Saggi, Kamal and Yildiz, Halis Murat, On the International Linkages between Trade and Merger Policies. Review of International Economics, Vol. 14, No. 2, pp. 212-225, May 2006, Available at SSRN: https://ssrn.com/abstract=896584 or http://dx.doi.org/10.1111/j.1467-9396.2006.00571.x

Kamal Saggi (Contact Author)

Southern Methodist University (SMU) - Department of Economics ( email )

Dallas, TX 75275
United States
214-768-3274 (Phone)
214-768-1821 (Fax)

Halis Murat Yildiz

Ryerson University - Economics and Management Science ( email )

350 Victoria Street
Toronto, Ontario M5B 2K3
Canada

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