Discussion Papers, Department of Finance and Management Science, Norwegian School of Economics (NHH)
No 2005/8:
Access regulation and cross-border mergers: Is international coordination beneficial?
Kjell Erik Lommerud ()
, Trond E. Olsen ()
and Odd Rune Straume ()
Abstract: The international integration of regulated markets poses
new challenges for regulatory policy. One question is the implications that
the overall international regulatory regime will have for cross-border
and/or domestic merger activity. In particular, do non-coordinated policies
stimulate cross-border mergers that are overall inefficient, and is this
then an argument for international coordination of such policies? The paper
addresses this issue in a setting where firms must have access to a
transportation network which is controlled by national regulators. The
analysis reveals that while non-coordinated regulatory policies may induce
cross-border mergers (by allowing the firms in question to play national
regulators out against each other), this can nevertheless be overall
welfare enhancing compared to market outcomes under coordinated
regulation.
Keywords: Access regulation; Endogenous merger; Policy coordination; (follow links to similar papers)
JEL-Codes: L13; L41; L50; (follow links to similar papers)
27 pages, November 30, 2005
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