GEP Research Paper 98/01

Mergers in Open Economies

Rod Falvey

Published in The World Economy , Vol. 21 (1998), pp. 1061-1076.

Abstract

This paper explores the problems of merger policy in open economies, using a simple model of the market for a homogeneous product in which firms are Cournot competitors and differ in their unit costs. Mergers can take place within or across national boundaries, and may raise or lower global welfare. Their approval by national competition authorities will depend on their separate national welfare effects, however, which can lead to biases against socially desirable international mergers.

Issued in December 1998.

This paper is available in PDF format .