Discussion paper

DP6397 Cross-Border Mergers & Acquisitions and the Role of Trade Costs

Cross-border mergers and acquisitions (M&As) have increased dramatically over the last two decades. This paper analyses the role of trade costs in explaining the increase in the number of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&As and investigate whether trade costs affect these two types of mergers differently. We analyse this question using industry data for 23 OECD countries for the period 1990-2001. Our findings suggest that while in the aggregate trade costs affect cross-border merger activity negatively its impact differs importantly across horizontal and non-horizontal mergers. The impact of trade costs is less negative for horizontal mergers, which is consistent with the tariff-jumping argument.


Görg, H, M Manchin and A Hijzen (2007), ‘DP6397 Cross-Border Mergers & Acquisitions and the Role of Trade Costs‘, CEPR Discussion Paper No. 6397. CEPR Press, Paris & London. https://cepr.org/publications/dp6397