Acquisitions by Multinationals and Trade Liberalization

A. Ray Chaudhuri

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Abstract This paper develops a theoretical framework where a multinational firm (MNE) is allowed to acquire or sell a productive asset in multiple segmented asset markets. The asset is used to produce a final good which can be sold in multiple countries, with segmented product markets, undergoing trade liberalization. I explicitly model the asset markets as well as the product markets. The paper identifies initial conditions in terms of the MNE’s pre-liberalization asset holdings across different segmented markets as a crucial factor for determining whether merger waves are triggered by trade liberalization. The more asymmetric the pre-liberalization asset holdings of the MNE across the multiple segmented markets, the more likely that trade liberalization induces an international merger wave that may harm consumers by raising product prices in multiple markets.
Original languageEnglish
Place of PublicationTilburg
Number of pages27
Publication statusPublished - 2014

Publication series

NameCentER Discussion Paper


  • acquisitions
  • multinational firms
  • endogenous mergers
  • cross-border mergers
  • trade liberalization


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