Scandinavian Working Papers in Economics

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2005/8: Access regulation and cross-border mergers: Is international coordination beneficial?

Kjell Erik Lommerud (), Trond E. Olsen () and Odd Rune Straume ()
Additional contact information
Kjell Erik Lommerud: Department of Economics, University of Bergen, Postal: University of Bergen, Department of Economics, Postboks 7802, 5020 Bergen , Norway
Trond E. Olsen: Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
Odd Rune Straume: Department of Economics, University of Bergen, Postal: University of Bergen, Department of Economics, Postboks 7802, 5020 Bergen , Norway

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

JEL-codes: L13; L41; L50

27 pages, November 30, 2005

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