Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Monday, February 11, 2019

Merger Policy in a Quantitative Model of International Trade

Holger Breinlichy (University of Surrey, CEP and CEPR); Volker Nockez (University of Mannheim, NBER and CEPR); Nicolas Schutzx (University of Mannheim and CEPR) study Merger Policy in a Quantitative Model of International Trade.

Abstract: In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to bene t domestic consumers is too tough or too lenient from the viewpoint of the foreign country. We calibrate the model to match industry-level data in the U.S. and Canada. Our results suggest that at present levels of trade costs, merger policy is too tough in the vast majority of sectors. We also quantify the resulting externalities and study the impact of di erent regimes of coordinating merger policies at varying levels of trade costs.

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