International mergers : incentives and welfare

Larry D. QIU*, Wen ZHOU

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

49 Citations (Scopus)

Abstract

Information asymmetry creates incentives for firms from different countries to merge. To demonstrate this point, we develop a model of international oligopolistic competition under demand uncertainty and asymmetric information. We show that when domestic firms but not foreign firms are completely informed of local market demands, information sharing enhances the profitability of a merger between a domestic firm and a foreign firm. We also examine how such a merger affects the non-merging firms' profits, consumer surplus and social welfare.
Original languageEnglish
Pages (from-to)38-58
Number of pages21
JournalJournal of International Economics
Volume68
Issue number1
Early online date21 Jun 2005
DOIs
Publication statusPublished - 2006
Externally publishedYes

Keywords

  • International mergers
  • Cross-border mergers
  • Merger incentives
  • Welfare
  • Information sharing
  • Output coordination

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