DP2459 Merger Policies And Trade Liberalization

Author(s): Henrik Horn, James A Levinsohn
Publication Date: May 2000
Keyword(s): Merger Policy, Strategic Competition Policy, Trade Liberalization
JEL(s): F23, L13
Programme Areas: Industrial Organization, International Trade and Regional Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2459

As international economic integration has progressed, policy makers have started to ponder the possible conflicts arising from nationally pursued competition policies in more unified goods markets. An idea underlying much of this discussion is the notion that international trade liberalisation, by limiting countries' abilities to promote their self-interest with beggar-thy-neighbour trade policies, will induce countries to instead use competition policies to pursue the same goals. We argue that one should not expect to find any particular relationship between trade policy and merger policy. Thus, we find no theoretical presumption that international trade liberalisation induces countries to pursue merger policies that have more of a beggar-thy-neighbour flavour.