Cross-border mergers as instruments of comparative advantage
A two-country model of oligopoly in general equilibrium is used to show how changes in market structure accompany the process of trade and capital-market liberalization. The model predicts that bilateral mergers in which low-cost firms buy out higher-cost foreign rivals are profitable under Cournot...
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| Format: | Journal article |
| Language: | English |
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Blackwell Publishing
2007
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| _version_ | 1797065983663276032 |
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| author | Neary, J |
| author2 | Review of Economic Studies Ltd |
| author_facet | Review of Economic Studies Ltd Neary, J |
| author_sort | Neary, J |
| collection | OXFORD |
| description | A two-country model of oligopoly in general equilibrium is used to show how changes in market structure accompany the process of trade and capital-market liberalization. The model predicts that bilateral mergers in which low-cost firms buy out higher-cost foreign rivals are profitable under Cournot competition. As a result, trade liberalization can trigger international merger waves, in the process encouraging countries to specialize and trade more in accordance with comparative advantage. With symmetric countries, welfare is likely to rise, though the distribution of income always shifts towards profits. |
| first_indexed | 2024-03-06T21:35:59Z |
| format | Journal article |
| id | oxford-uuid:4648f49c-0679-40b8-aeb3-88c50ffbb185 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-06T21:35:59Z |
| publishDate | 2007 |
| publisher | Blackwell Publishing |
| record_format | dspace |
| spelling | oxford-uuid:4648f49c-0679-40b8-aeb3-88c50ffbb1852022-03-26T15:12:48ZCross-border mergers as instruments of comparative advantageJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:4648f49c-0679-40b8-aeb3-88c50ffbb185EconomicsEnglishOxford University Research Archive - ValetBlackwell Publishing2007Neary, JReview of Economic Studies LtdA two-country model of oligopoly in general equilibrium is used to show how changes in market structure accompany the process of trade and capital-market liberalization. The model predicts that bilateral mergers in which low-cost firms buy out higher-cost foreign rivals are profitable under Cournot competition. As a result, trade liberalization can trigger international merger waves, in the process encouraging countries to specialize and trade more in accordance with comparative advantage. With symmetric countries, welfare is likely to rise, though the distribution of income always shifts towards profits. |
| spellingShingle | Economics Neary, J Cross-border mergers as instruments of comparative advantage |
| title | Cross-border mergers as instruments of comparative advantage |
| title_full | Cross-border mergers as instruments of comparative advantage |
| title_fullStr | Cross-border mergers as instruments of comparative advantage |
| title_full_unstemmed | Cross-border mergers as instruments of comparative advantage |
| title_short | Cross-border mergers as instruments of comparative advantage |
| title_sort | cross border mergers as instruments of comparative advantage |
| topic | Economics |
| work_keys_str_mv | AT nearyj crossbordermergersasinstrumentsofcomparativeadvantage |