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Title: Merger Policy in a Quantitative Model of International Trade

Author(s): Holger Breinlich, Volker Nocke and Nicolas Schutz

Publication Date: September 2015

Keyword(s): International Trade, Merger Policy, Mergers and Acquisitions, Oligopoly and Trade Policy

Programme Area(s): Industrial Organization and International Trade and Regional Economics

Abstract: In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is too tough or too lenient from the viewpoint of the foreign country. We calibrate the model to match industry-level data in the U.S. and Canada. Our results suggest that at present levels of trade costs, merger policy is too tough in the vast majority of sectors. We also quantify the resulting externalities and study the impact of different regimes of coordinating merger policies at varying levels of trade costs.

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Bibliographic Reference

Breinlich, H, Nocke, V and Schutz, N. 2015. 'Merger Policy in a Quantitative Model of International Trade'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10851