Profitable mergers with endogenous tariffs

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

In this note, we suggest a link between tariff protection and firms' incentives to engage in a horizontal merger. We consider a Cournot oligopoly with equal, constant marginal costs where firms have to decide on lobbying efforts prior to choosing output. These lobbying efforts will determine whether a prohibitive tariff is introduced. We find that the possibility of lobbying may enlarge the set of mergers that are profitable, even without cost reductions.

Original languageEnglish
JournalEconomics Bulletin
Volume12
Issue number22
Publication statusPublished - 2007 Sep 25
Externally publishedYes

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Mergers
Tariffs
Lobbying
Marginal cost
Incentives
Cournot oligopoly
Horizontal mergers

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Profitable mergers with endogenous tariffs. / Mendi, Pedro; Veszteg, Robert Ferenc.

In: Economics Bulletin, Vol. 12, No. 22, 25.09.2007.

Research output: Contribution to journalArticle

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