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Gains from multinational competition for crossborder firm acquisition

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  • Koska, Onur A.

Abstract

This study shows that when there is multinational competition for foreign acquisition, the strategic use of a consumer welfare argument in regulating foreign market entry leads to a preemptive foreign acquisition. Even under fierce competition, foreign acquisition will emerge as part of a non-cooperative equilibrium (although multinationals would have gained more had they been able to credibly commit to a cooperative equilibrium of independent foreign sales, either via greenfield investment or trade under complete liberalization) which increases local welfare by more than both the case without foreign market entry and the case with foreign market entry via independent foreign sales.

Suggested Citation

  • Koska, Onur A., 2018. "Gains from multinational competition for crossborder firm acquisition," Economics Discussion Papers 2018-19, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201819
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    1. Onur A. Koska, 2019. "A consumer-surplus standard in foreign acquisitions, foreign direct investment, and welfare," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 149-179, February.
    2. Harms, Philipp & Wacker, Konstantin M., 2019. "The special issue on FDI and multinational corporations: An introduction," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-7.

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    More about this item

    Keywords

    cross-border firm acquisitions; foreign market entry regulations; greenfield investment; trade; consumer welfare;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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