Cross-Border Merger Waves

34 Pages Posted: 29 Jun 2006

See all articles by Eileen Fumagalli

Eileen Fumagalli

University of Bocconi

Helder Vasconcelos

Universidade do Porto - Faculdade de Economia (FEP)

Date Written: April 2006


This paper proposes a sequential merger formation game with cost synergies to study how trade policy can influence firms' choice between domestic and cross-border mergers in an international Cournot oligopoly. We find that the equilibrium market structure depends heavily on: (i) the level of trade costs; and (ii) whether or not active antitrust authorities are incorporated within the sequential merger game. In addition, it is shown that whenever mergers occur in equilibrium, they occur in waves and the merger wave comprises at least one cross-border merger. We also analyze how the equilibrium market structures are affected by the presence of lobbying efforts.

Keywords: Endogenous mergers, merger waves, tariff-jumping FDI

JEL Classification: F10, F13, L13, L41

Suggested Citation

Fumagalli, Eileen and Vasconcelos, Helder, Cross-Border Merger Waves (April 2006). CEPR Discussion Paper No. 5601, Available at SSRN:

Eileen Fumagalli

University of Bocconi ( email )

Via Sarfatti 25
20136 Milan, MI 20136
+39 02 5836 5428 (Phone)
+39 02 5836 3332 (Fax)

Helder Vasconcelos (Contact Author)

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Dr. Roberto Frias
4200-464 Porto, 4200-464


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