Discussion Paper

No. 2018-19 | February 19, 2018
Gains from multinational competition for cross-border firm acquisition
(Published in Special Issue FDI and Multinational Corporations)


This study shows that when there is multinational competition for foreign acquisition, the strategic use of a consumer welfare argument in regulating foreign market entry leads to a preemptive foreign acquisition. Even under fierce competition, foreign acquisition will emerge as part of a non-cooperative equilibrium (although multinationals would have gained more had they been able to credibly commit to a cooperative equilibrium of independent foreign sales, either via greenfield investment or trade under complete liberalization) which increases local welfare by more than both the case without foreign market entry and the case with foreign market entry via independent foreign sales.

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Cite As

Onur A. Koska (2018). Gains from multinational competition for cross-border firm acquisition. Economics Discussion Papers, No 2018-19, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2018-19

Comments and Questions

Anonymous - Referee report 1
February 26, 2018 - 09:10

see attached file