Merger Policy in a Quantitative Model of International Trade

50 Pages Posted: 29 Sep 2015 Last revised: 10 Sep 2018

See all articles by Holger Breinlich

Holger Breinlich

University of Surrey - School of Economics; Centre for Economic Policy Research (CEPR); London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Volker Nocke

University of Mannheim

Nicolas Schutz

University of Mannheim

Multiple version iconThere are 2 versions of this paper

Date Written: September 2015

Abstract

In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is too tough or too lenient from the viewpoint of the foreign country. We calibrate the model to match industry-level data in the U.S. and Canada. Our results suggest that at present levels of trade costs, merger policy is too tough in the vast majority of sectors. We also quantify the resulting externalities and study the impact of different regimes of coordinating merger policies at varying levels of trade costs.

Keywords: International Trade, Merger Policy, Mergers and Acquisitions, Oligopoly, Trade Policy

JEL Classification: F12, F13, L13, L44

Suggested Citation

Breinlich, Holger and Nocke, Volker and Schutz, Nicolas, Merger Policy in a Quantitative Model of International Trade (September 2015). CEPR Discussion Paper No. DP10851, Available at SSRN: https://ssrn.com/abstract=2666995

Holger Breinlich (Contact Author)

University of Surrey - School of Economics ( email )

Guildford, Surrey GU2 7XH
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Volker Nocke

University of Mannheim ( email )

Nicolas Schutz

University of Mannheim ( email )

D-68131 Mannheim
Germany

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