Merger Policy in a Quantitative Model of International Trade
50 Pages Posted: 29 Sep 2015 Last revised: 10 Sep 2018
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Merger Policy in a Quantitative Model of International Trade
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: Suggested Citation