FS IV 01 – 12 Merger Profitability and Trade Policy
نویسندگان
چکیده
Merger Profitability and Trade Policy by Steffen Huck and Kai A. Konrad We study the profitability and welfare effects of merger in a strategic trade policy environment. Merger changes the strategic trade policy equilibrium. We show that merger can be profitable and welfare enhancing here, even though it is not profitable in a laissez-faire economy. A key element is the change in the governments’ incentives to give subsidies to their local firms. We apply the results to the merger between Boeing and McDonnell-Douglas, where subsidies are a constant matter of debate. Our theory explains why the merger was profitable for Boeing and McDonnell-Douglas, why Airbus Industries opposed the merger, why the US authorities agreed to the merger, and why the EU competition authorities opposed it.
منابع مشابه
FS IV 01 – 22 Downstream Merger with Oligopolistic Input Suppliers
Downstream Merger with Oligopolistic Input Suppliers by Kjell Erik Lommerud, Odd Rune Straume, Lars Sørgard We examine how a downstream merger affects input prices and, in turn, the profitability of such a merger under Cournot competition with differentiated products. Input suppliers can be interpreted as ordinary upstream firms, or trade unions organising workers. If the input suppliers are pl...
متن کاملMerger Policy , Entry , and Entrepreneurship
We assess the impact of merger policy on entry and entrepreneurship. Facing uncertainty about its prospects and foreseeing that it may wish to quit should profitability prove poor, a rational entrant considers possible exit routes. Horizontal merger reduces competition subsequently, lowering welfare in the short run, but also provides a valuable exit route. By facilitating exit and thus raising...
متن کاملFS IV 01 – 04 Merger and Collusion in Contests
Merger and Collusion in Contests by Steffen Huck, Kai A. Konrad and Wieland Müller Competition in some product markets takes the form of a contest. If some firms cooperate in such markets, they must decide how to allocate effort on each of their products and whether to reduce the number of their products in the competition. We show how this decision depends on the convexity properties of the co...
متن کاملRobin Mason University of Southampton and CEPR Helen Weeds University of Essex and CEPR 16 August 2007
We assess the impact of merger policy on entry and entrepreneurship. Facing uncertainty about its prospects and foreseeing that it may wish to quit should profitability prove poor, a rational entrant considers possible exit routes. Horizontal merger reduces competition subsequently, lowering welfare in the short run, but also provides a valuable exit route. By facilitating exit and thus raising...
متن کاملFS IV 02 – 25 Strategic Trade Policy and the Home Bias in Firm Ownership Structure Steffen
Strategic Trade Policy and the Home Bias in Firm Ownership Structure by Steffen Huck and Kai A. Konrad In this note we consider the preferences of a profit maximizing firm for international ownership in a world in which firms compete in an international Cournot oligopoly, and in which countries use strategic trade policy. We find that firms prefer national ownership and show that full indigenis...
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