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International trade and the incentive for merger

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  • Martin Chalkley
  • Geoff Stewart

Abstract

This article examines the profitability of horizontal merger in an open economy with Cournot competition. We find that duopoly is a necessary, but not sufficient, condition for domestic merger to be profitable. A cross-border merger, however, can be profitable from any market structure.

Suggested Citation

  • Martin Chalkley & Geoff Stewart, 2011. "International trade and the incentive for merger," Applied Economics, Taylor & Francis Journals, vol. 43(13), pages 1673-1677.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:13:p:1673-1677
    DOI: 10.1080/00036840903527171
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    References listed on IDEAS

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    1. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    2. Gérard Gaudet & Rams Kanouni, 2004. "Trade Liberalization and the Profitability of Domestic Mergers," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 353-358, August.
    3. Rod Falvey, 1998. "Mergers in Open Economies," The World Economy, Wiley Blackwell, vol. 21(8), pages 1061-1076, November.
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    Cited by:

    1. 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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