Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26262
Authors: 
Egger, Hartmut
Egger, Peter
Year of Publication: 
2008
Series/Report no.: 
CESifo working paper 2217
Abstract: 
This paper analyzes the consequences of cross-border mergers in a spatial framework, thereby distinguishing three channels of influence: a price increase due to the elimination of product market competition, an adjustment in plant location which reduces overall transportation cost expenditures, and a harmonization in production costs due to a technology transfer within the firm. The welfare analysis illustrates that larger countries are better off after the merger. By contrast, smaller countries may lose, if the pre-merger production cost differential across firms is negligible and/or a post-merger technology transfer across production sites is infeasible. Furthermore, the analysis provides novel insights into the trade pattern effects of a merger. In this respect, the main result of the paper is that an adjustment of plant location in space can reverse the direction of (net) trade flows.
Subjects: 
spatial competition
cross-border merger
trade pattern
welfare analysis
JEL: 
F12
F23
L10
Document Type: 
Working Paper

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