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Export orientation and domestic merger policy: theory and some empirical evidence

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  • Joseph Clougherty
  • Anming Zhang

Abstract

Recent `open-economy industrial organization' literature finds export orientation enhances the weight of post-merger international competitive gains, favouring lenient domestic merger policy. However, mergers seldom generate the `significant synergies' supportive of international competitive gains. Since a joint-economies-of-production effect suggests domestic mergers tend to generate international competitive losses (not gains), export orientation favours strict (not lenient) domestic merger policy. We show how non-synergistic domestic mergers in the presence of international sales might reduce national welfare and incur stringent merger reviews. A panel data set of U.S. merger policy by manufacturing sector, 1990-2001, empirically supports export orientation, leading to strict merger policy.

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  • Joseph Clougherty & Anming Zhang, 2005. "Export orientation and domestic merger policy: theory and some empirical evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 778-806, August.
    • Handle: RePEc:cje:issued:v:38:y:2005:i:3:p:778-806
    DOI: 10.1111/j.0008-4085.2005.00302.x
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    Cited by:

    1. Marina Tsygankova, 2007. "The Export of Russian Gas to Europe: Breaking Up the Monopoly of Gazprom," Energy and Environmental Modeling 2007 24000062, EcoMod.
    2. Joseph A. Clougherty & Anming Zhang, 2009. "Domestic rivalry and export performance: theory and evidence from international airline markets," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(2), pages 440-468, May.
    3. Joseph Clougherty, 2010. "Competition Policy Trends and Economic Growth: Cross-National Empirical Evidence," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 17(1), pages 111-127.
    4. Ohashi, Hiroshi & Toyama, Yuta, 2017. "The effects of domestic merger on exports: A case study of the 1998 Korean automobile industry," Journal of International Economics, Elsevier, vol. 107(C), pages 147-164.
    5. Rikard Forslid & Jonas Häckner & Astri Muren, 2011. "Trade costs and the timing of competition policy adoption," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(1), pages 171-200, February.
    6. Joseph A. Clougherty, 2005. "Industry Trade Balance And Domestic Merger Policy: Empirical Evidence From U.S. Merger Policy For Manufacturing Sectors," Contemporary Economic Policy, Western Economic Association International, vol. 23(3), pages 404-415, July.
    7. Sugata Marjit & Moushakhi Ray, 2020. "Asset Level Heterogeneity, Competition and Export Incentives: The Role of Credit Rationing," CESifo Working Paper Series 8208, CESifo.
    8. Ho, Chun-Yu & McCarthy, Patrick & Wang, Yanhao, 2021. "Competition and countervailing power: Evidence from the China Eastern and Shanghai Airlines merger," Journal of Air Transport Management, Elsevier, vol. 91(C).
    9. Nakamura, Masao & Zhang, Anming, 2018. "Foreign direct investment with host country market structures, with empirical application to Japan," Journal of the Japanese and International Economies, Elsevier, vol. 49(C), pages 43-53.
    10. Marjit, Sugata & Ray, Moushakhi, 2017. "Export profitability, competition and technology," International Review of Economics & Finance, Elsevier, vol. 47(C), pages 35-45.
    11. Tsygankova, Marina, 2012. "An evaluation of alternative scenarios for the Gazprom monopoly of Russian gas exports," Energy Economics, Elsevier, vol. 34(1), pages 153-161.
    12. Nobuyuki Takashima & Yasunori Ouchida, 2020. "Quality‐improving R&D and merger policy in a differentiated duopoly: Cournot and Bertrand equilibria," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(7), pages 1338-1348, October.

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    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • F10 - International Economics - - Trade - - - General

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