TY - JOUR
T1 - The effects of domestic merger on exports
T2 - A case study of the 1998 Korean automobile industry
AU - Ohashi, Hiroshi
AU - Toyama, Yuta
N1 - Publisher Copyright:
© 2017 Elsevier B.V.
PY - 2017/7/1
Y1 - 2017/7/1
N2 - This paper examines the economic consequences of a horizontal merger between Korean automakers that took place in 1998, with a particular emphasis on export market behavior. Estimates of structural demand and supply reveal that the merger enhanced production efficiency of the merged party by 3.8%. Simulations, based on these estimates, indicate that while the merger increased domestic prices, the export volume of the merged party was more than doubled. Moreover, the effects of the merger are found to differ by auto model according to the model's pre-merger export status. It is shown that efficiency gains from the merger are likely to increase export volumes for models that were already exported prior to the merger, and to offset domestic market power for those that were not exported even after the merger. Finally, the paper compares the actual merger's effects to those of alternative counterfactual mergers, finding that the actual merger brought greater benefits to producers and fewer to domestic consumers.
AB - This paper examines the economic consequences of a horizontal merger between Korean automakers that took place in 1998, with a particular emphasis on export market behavior. Estimates of structural demand and supply reveal that the merger enhanced production efficiency of the merged party by 3.8%. Simulations, based on these estimates, indicate that while the merger increased domestic prices, the export volume of the merged party was more than doubled. Moreover, the effects of the merger are found to differ by auto model according to the model's pre-merger export status. It is shown that efficiency gains from the merger are likely to increase export volumes for models that were already exported prior to the merger, and to offset domestic market power for those that were not exported even after the merger. Finally, the paper compares the actual merger's effects to those of alternative counterfactual mergers, finding that the actual merger brought greater benefits to producers and fewer to domestic consumers.
KW - Automobiles
KW - Efficiency
KW - Export
KW - Horizontal merger
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U2 - 10.1016/j.jinteco.2017.04.001
DO - 10.1016/j.jinteco.2017.04.001
M3 - Article
AN - SCOPUS:85019064475
VL - 107
SP - 147
EP - 164
JO - Journal of International Economics
JF - Journal of International Economics
SN - 0022-1996
ER -