Abstract
We study the profitability incentives for merger and the endogenous industry structure in a strategic trade policy environment. Merger changes the strategic trade policy equlilibrium. We show that merger can be profitable and welfare enhancing, even though it would not be profitable in a laissez-faire economy. A key element is a change in the governments' incentives to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger does not. © The editors of the Scandinavian Journal of Economics 2004.
| Item Type: | Journal article |
|---|---|
| Form of publication: | Publisher's Version |
| Keywords: | incentive; merger; profitability; trade policy |
| Faculties: | Economics > Chairs > MPI for Tax Law and Public Finance |
| Subjects: | 300 Social sciences > 330 Economics |
| JEL Classification: | D43, D44, F12, L11, L13 |
| ISSN: | 0347-0520 |
| Language: | English |
| Item ID: | 22114 |
| Date Deposited: | 09. Dec 2014, 09:59 |
| Last Modified: | 04. Nov 2020, 13:02 |
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