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Strategic Trade Policy and Merger Profitability

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  • Steffen Huck
  • Kai A. Konrad

Abstract

We study the profitability incentives of merger and the endogenous industry structure in a strategic trade policy environment. Merger changes the strategic trade policy equlilibrium. We show that merger can be profitable and welfare enhancing here, even though it would not be profitable in a laissez-faire economy. A key element is the change in the governments. incentives to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger does not.

Suggested Citation

  • Steffen Huck & Kai A. Konrad, 2003. "Strategic Trade Policy and Merger Profitability," CESifo Working Paper Series 948, CESifo.
    • Handle: RePEc:ces:ceswps:_948
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    File URL: https://www.cesifo.org/DocDL/cesifo_wp948.pdf
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    References listed on IDEAS

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    Cited by:

    1. Kjell Erik Lommerud & Odd Rune Straume & Lars Sørgard, 2006. "National versus international mergers in unionized oligopoly," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 212-233, March.
    2. James Gaisford & Stefan Lutz, 2007. "A Multi-Product Framework Generating Waves of Mergers and Divestitures," ICER Working Papers 36-2007, ICER - International Centre for Economic Research.

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    Keywords

    merger incentives; strategic trade policy;

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