JEL classification: F10 F13 L13 L41
Keywords:Endogenous mergers Merger policy Tariff-jumping FDI Endogenous split of surplus This paper proposes a sequential merger formation game to study how trade policy can influence firms' choice between intra-national and cross-border mergers in an international Cournot oligopoly with a cost structure à la Perry and Porter [Perry, M. and Porter, R.H., 1985. Oligopoly and the Incentive for Horizontal Merger. American Economic Review 75(1), 219-227.]. We find that the equilibrium market structure depends heavily on: (i) the level of trade costs; and (ii) whether or not active antitrust authorities are incorporated within the sequential merger game. In addition, it is shown that whenever mergers occur in equilibrium, they occur in waves and the merger wave comprises at least one cross-border merger.
This paper tests whether constitutions directly affect economic outcomes. By introducing citizens' political participation as the driving force connecting institutions to policy outcomes, we empirically show that voter turnout is the channel through which forms of government affect economic policies. We provide evidence of the existence of two relationships. First, presidential regimes appear to be associated with lower voter participation in national elections. Second, higher voter participation induces an increase in government expenditure, total revenues, welfare state spending, and budget deficit. We conclude that forms of government affect policy outcomes only through voter turnout. Hig h lig h t s Relat io n sh ip b et w een f o r m s o f g o ver n m en t an d elect o r al p ar t icip at io n . Lo w er p ar t icip at io n in p r esid en t ial r eg im es. Hig h er t ur n o u t r at es ar e asso ciat ed t o lar g er g o ver n m en t sp en d in g , h ig h er g o ver n m en t , r even u es, m o r e g en er o us w elf ar e st at e an d lar g er b u d g et d ef icit s. Fo r m s o f g o ver n m en t in f lu en ce p o licies t h r o u g h vo t er p ar t icip at io n at g en er al elect io n s
Merger policy is a permission-granting activity by government in which there may be disincentives to seek permission because of the bene…t from having other …rms merge. We set up a sequential merger game with endogenized antitrust policy to study one aspect of these disincentives. In particular, we delineate a pill-sweetening motive for waiting to merge: a small …rm may choose to let other bigger …rms move …rst, in order to get more mergers approved by government. We report the prevalence of pill sweetening to occur in equilibrium and …nd it to hinge on e¢ ciency gains from a merger, di¤erently-sized …rms, …rms'production technology, the presence of an antitrust authority, the alignment of interests between antitrust authorities and …rms, and the number of …rms in the industry.
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