Firm‐productivity and cross border merger

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 bor...

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Veröffentlicht in:Review of international economics 2021-09, Vol.29 (4), p.838-859
Hauptverfasser: Mukherjee, Arijit, Senalp, Umut Erksan
Format: Artikel
Sprache:eng
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Zusammenfassung: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.
ISSN:0965-7576
1467-9396
DOI:10.1111/roie.12510