Cross-Border Mergers and Market Segmentation (Replaces TILEC DP 2010-035)

A. Ray Chaudhuri

Research output: Working paperDiscussion paperOther research output

Abstract

This paper shows that cross-border mergers are more likely to occur in industries which serve multiple segmented markets rather than a single integrated market, given that cost functions are strictly convex. The product price rises in the market where an acquisition is made but falls in the other, decreasing the acquisition price of other firms (in contrast to the results in the existing merger literature on integrated markets). Although the sum of consumer surplus across the countries may rise in response to a given acquisition, one of the countries gains at the expense of the other.
Original languageEnglish
Place of PublicationTilburg
PublisherTILEC
Volume2011-047
Publication statusPublished - 2011

Publication series

NameTILEC Discussion Paper
Volume2011-047

Keywords

  • cross-border mergers
  • endogenous mergers
  • competition policy
  • Cournot competition

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