Merger Policy In An International Setting

This paper is about the interaction between trade policy and narrow but important aspect of competition policy, namely merger policy. We focus on one key issue: mergers with international dimension. We introduce a one-market model of international trade policy under imperfect competition. We study the effects of domestic and foreign mergers on the domestic country’s optimal trade policy and on domestic and foreign welfare when the domestic country pursues its optimal trade policy. By implementing three antitrust rules, we determine the ‘conflict’ and ‘blocking’ zones for mergers. Later on, we discuss the effects of trade liberalization on merger policy. By comparing the free trade case to the trade policy case, we assess whether trade liberalization leads to tougher or lenient merger policies.

Merger policy, international mergers, international dimension of competition policy

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