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Cross-border Mergers and Privatization

Author

Listed:
  • Hamid Beladi
  • Avik Chakrabarti

    (University of Wisconsin, Milwaukee)

  • Sugata Marjit

    (Centre for Studies in Social Sciences)

Abstract

We construct a tractable open economy general equilibrium model of a mixed oligopoly. Our model is then applied to capture the incentives for and implications of cross-border horizontal mergers and trade in the presence of a public firm. Absent any possibility of cross-border mergers, an increase in the degree of privatization will result in a shrinking of the extensive margins of trade. Cross-border mergers will mitigate, by aligning specialization toward the direction of comparative advantage, the effect of privatization on the extensive margins of trade. Allowing firms to move sequentially will magnify the effect that cross-border mergers have on the extensive margins of trade: the magnification effect will be larger when the private firms lead than it will be if the private firms follow..

Suggested Citation

  • Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2015. "Cross-border Mergers and Privatization," Working Papers 0147eco, College of Business, University of Texas at San Antonio.
    • Handle: RePEc:tsa:wpaper:0147eco
    as

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    References listed on IDEAS

    as
    1. Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2013. "Privatization and Strategic Mergers across Borders," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 432-446, August.
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    More about this item

    Keywords

    General Equilibrium; International Trade; Multinational Corporations; Cross-border Merger; Diversification; Comparative Advantage; Privatization; M-GOLE.;
    All these keywords.

    JEL classification:

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

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