Essays in Honour of Peter Lloyd, Volume I
Edited by Sisira Jayasuriya
Chapter 6: Endogenous mergers and tariffs in an integrated market
6. Endogenous mergers and tariﬀs in an integrated market* Rod Falvey 1. INTRODUCTION The objective of this chapter is to explore the eﬀects of tariﬀs on the profitability and global welfare consequences of mergers in open economies. The general reduction in trade barriers in the last few decades has brought the international aspects of domestic competition policies into greater prominence, and there now exists a signiﬁcant literature dealing with mergers between ﬁrms located in diﬀerent political jurisdictions.1 Two questions have been of particular interest. First, what type of merger activity, if any, has been encouraged by this general process of trade liberalization? Answering this question involves assessing the eﬀects of trade policy on the proﬁtability of mergers to their potential participants. But given that mergers are regulated in most states, a second element must also be considered. Are competition authorities likely to view mergers more or less favourably in a more open economy? Answering this question involves consideration of the eﬀects of trade policy on the welfare costs and beneﬁts of mergers. The success of international agreements constraining the ability of governments to use trade policies because of their undesirable beggar-thyneighbour consequences has raised concern that some governments may be tempted to substitute other policies, competition policy in particular, with similar outcomes (Lloyd and Sampson, 1995). Should trade agreements be complemented by agreements on, or ‘harmonization’ of, competition policies, and what form should such agreements take (Lloyd, 1998)? This concern prompted...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.