Cross-Border Mergers as Instruments of Comparative Advantage

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cege Discussion Papers ; No. 34

Classification and Topics

• Classification: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Trade: General
• Subject: Comparative advantage ; cross-border mergers ; GOLE (General Oligopolistic Equilibrium) ; market integration ; merger waves ; Übernahme ; Grenze ; Oligopol ; Zwei-Länder-Modell ; Aussenhandelsliberalisierung ; Kapitalmarktliberalisierung ; Komparativer Kostenvorteil

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Neary, J. Peter
• Event: Veröffentlichung
• (who): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (where): Göttingen
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/22161
• Last update: 10.03.2025, 11:45 AM CET