Merger Policy to Promote Global Players? A Simple Model

Haufler, Andreas and Nielsen, Søren Bo (July 2005): Merger Policy to Promote Global Players? A Simple Model. Discussion Papers in Economics 2005-13

Abstract

We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyze under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies enacted by a national merger authority tend to be overly restrictive from a global efficiency perspective. In contrast, all international mergers that benefit the merging firms will be cleared by either a national or a regional regulator, and this laissez-faire approach is also globally efficient. Finally, we derive the properties of the endogenous merger equilibrium.

• Item Type: Paper (Discussion Paper)
• Keywords: merger policy; international trade
• Subjects: Economics; Economics > Discussion Papers in Economics; Economics > Discussion Papers in Economics > Industrial Organization
• Dewey Classification: 300 Social sciences; 300 Social sciences > 330 Wirtschaft
• Journal of Economic Literature classification: L41, F13, H77
• Language: English