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.
Journal of Industry, Competition and Trade
Cross–Border Mergers & Acquisitions Policy in Service Markets
Vetenskaplig artikel på engelska