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On Cross-Border Mergers and Product Differentiation

Author

Listed:
  • Beladi Hamid

    (Department of Economics, College of Business, University of Texas at San Antonio, One UTSA Circle, San Antonio, TX 78249-–0633, USA)

  • Chakrabarti Avik

    (Department of Economics, University of Wisconsin-Milwaukee, Milwaukee, WI 53201-0413, USA)

  • Marjit Sugata

    (Centre for Studies in Social Sciences (CSSSC), R-1 Baishnabghata-Patuli Township, Kolkata 700094, West Bengal, India)

Abstract

We construct a general equilibrium model of an oligopolistic industry that allows us to capture the role of product differentiation in the incentives for and implications of cross-border mergers. We show that a rise in the degree of product differentiation will compress the extensive margins of trade and, at the same time, reduce the gains from cross-border mergers. We also demonstrate how cross-border mergers can mitigate the effect of product differentiation on the extensive margins of trade.

Suggested Citation

  • Beladi Hamid & Chakrabarti Avik & Marjit Sugata, 2015. "On Cross-Border Mergers and Product Differentiation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(1), pages 37-51, January.
    • Handle: RePEc:bpj:bejeap:v:15:y:2015:i:1:p:15:n:15
    DOI: 10.1515/bejeap-2014-0077
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    References listed on IDEAS

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    1. Reza Oladi & John Gilbert, 2011. "Monopolistic Competition and North–South Trade," Review of International Economics, Wiley Blackwell, vol. 19(3), pages 459-474, August.
    2. Jeffrey J Reuer & Oded Shenkar & Roberto Ragozzino, 2004. "Mitigating risk in international mergers and acquisitions: the role of contingent payouts," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(1), pages 19-32, January.
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    6. Batra, Raveendra N., 1972. "Monopoly theory in general equilibrium and the two-sector model of economic growth," Journal of Economic Theory, Elsevier, vol. 4(3), pages 355-371, June.
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    Cited by:

    1. Beladi, Hamid & Chakrabarti, Avik, 2019. "Multidivisional firms, internal competition, and comparative advantage: Baye et al. Meet Neary," Journal of International Economics, Elsevier, vol. 116(C), pages 50-57.
    2. Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2015. "Cross-border Mergers and Privatization," Working Papers 0147eco, College of Business, University of Texas at San Antonio.

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    More about this item

    Keywords

    general equilibrium; cross-border merger; international trade; oligopoly; GOLE; product differentiation; comparative advantage;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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