Author(s): Pehr-Johan Norbäck and Lars PerssonYear: 2008
Title:
Journal of Industry, Competition and Trade
Volume (No.): 8 (3-4)
Pages: 269–293
We provide facts showing that in service markets: (i) restrictions on foreign direct investment (FDI) are under reform, (ii) cross-border Mergers & Acquisitions dominate as the entry mode of FDI, and (iii) there is often a high market concentration. Based on these facts, we present a model for analyzing cross-border merger and acquisition policy in liberalized service markets taking into account efficiency and market power effects. Our findings suggest that a merger policy, but not a discriminatory policy towards foreigners, seems warranted. Moreover, policies ensuring competition for domestic target firms seem warranted. In this vein, harmonization of the EU takeover regulations may particularly benefit assets owners in countries with many target firms.
Reference:
Norbäck, Pehr-Johan and Lars Persson (2008),
"Cross-Border Mergers & Acquisitions Policy in Service Markets".
Journal of Industry, Competition and Trade
8(3-4),
269–293.