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Strategic policy and international economic integration

Author

Listed:
  • José J. Sempere Monerris

    (Universitat de València)

  • Rafael Moner Colonques

    (Universitat de València)

  • Amparo Urbano Salvador

    (Universitat de València)

Abstract

In a context of economic integration, we analyse the strategic effect of wo policies: merger policy and state aid policy. When governments play a Stackelberg policy game before firms compete in the market we find that: a) only under certain conditions, the leader country chooses a merger policy and, b) there is a policy equivalence in welfare terms for the follower. A centralised policy decision is welfare improving relative to the strategic policy game and equals total welfare of the area under autarky. Besides, there always exists a social incentive to propose mergers and both, the state aid level and the state aid expenditure, are lower.

Suggested Citation

  • José J. Sempere Monerris & Rafael Moner Colonques & Amparo Urbano Salvador, 1999. "Strategic policy and international economic integration," Working Papers. Serie AD 1999-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:1999-05
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    References listed on IDEAS

    as
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