Firm-productivity and cross border merger

Mukherjee, Arijit; Senalp, Umut Erksan

Abstract

We examine whether higher productivity of a foreign firm increases the incentive for a cross border merger, which is a dominant form of foreign direct investment in recent decades. In line with the empirical evidence, we show that the relationship between productivity of a foreign firm and cross border merger is mixed. We show that the market concentration effect plays an important role in determining the relationship and provides a rationale for a generally ignored empirical evidence showing a negative relationship between firm-productivity and cross border merger. Our results hold under both Cournot and Bertrand competition.

• Journal Article Type: Article
• Acceptance Date: Sep 20, 2020
• Online Publication Date: Nov 5, 2020
• Publication Date: 2021-09
• Deposit Date: Sep 28, 2020
• Publicly Available Date: Nov 6, 2022
• Journal: Review of International Economics
• Print ISSN: 0965-7576
• Electronic ISSN: 1467-9396
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 29
• Issue: 4
• Pages: 838-859
• DOI: https://doi.org/10.1111/roie.12510
• Keywords: Geography, Planning and Development; Development
• Public URL: https://nottingham-repository.worktribe.com/output/4931725
• Publisher URL: https://onlinelibrary.wiley.com/doi/abs/10.1111/roie.12510
• Additional Information: This is the peer reviewed version of the following article: Mukherjee, A, Senalp, UE. Firm-productivity and cross border merger. Rev Int Econ. 2021; 29: 838– 859., which has been published in final form at https://doi.org/10.1111/roie.12510. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.