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Cross-border mergers as instruments of comparative advantage |
Neary, J. Peter
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A two-country model of oligopoly in general equilibrium is used to show how changes
in market structure accompany the process of trade and capital market liberalisation. The
model predicts that bilateral mergers in which low-cost firms buy out higher-cost foreign rivals are profitable under Cournot competition. With symmetric countries, welfare may rise or fall, though the distribution of income always shifts towards profits. The model implies that trade liberalisation can trigger international merger waves, in the process encouraging
countries to specialise and trade more in accordance with comparative advantage. European Commission
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Keyword(s):
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Comparative advantage; Cross-border mergers; GOLE (General Oligopolistic Equilibrium); Market integration; Merger waves; F10; F12; L13; Competition, Imperfect; Comparative advantage (International trade); Oligopolies; Consolidation and merger of corporations |
Publication Date:
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2009 |
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Type:
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Working paper |
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Peer-Reviewed:
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Unknown |
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Language(s):
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English |
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Institution:
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University College Dublin |
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Publisher(s):
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University College Dublin. School of Economics |
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File Format(s):
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other; application/pdf |
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First Indexed:
2012-08-25 05:22:50 Last Updated:
2018-10-11 15:44:39 |
