TY - JOUR
T1 - Cross-border mergers and acquisitions vs. greenfield foreign direct investment
T2 - The role of firm heterogeneity
AU - Nocke, Volker
AU - Yeaple, Stephen
N1 - Funding Information:
We gratefully acknowledge financial support by the National Science Foundation (grant SES-0422778) and the University of Pennsylvania Research Foundation. A previous version of this paper was circulated and presented under the title Mergers and the Composition of International Commerce. We would like to thank Bruce Blonigen, Bill Ethier, Matt Slaughter, and Scott Taylor for helpful comments. We would also like thank seminar participants at the University of Pennsylvania, the London School of Economics, Yale University, the University of Wisconsin, Penn State University, Iowa State University, Syracuse University, and the NBER ITI Winter Meetings in Stanford.
Copyright:
Copyright 2008 Elsevier B.V., All rights reserved.
PY - 2007/7
Y1 - 2007/7
N2 - We develop a general equilibrium model with heterogeneous firms to address two sets of questions: (1) what are the characteristics of firms that choose the various modes of foreign market access (exporting, greenfield FDI, and cross-border M&A), and (2) how does the international organization of production vary across industries and country-pairs? We show that the answers to these questions depend on the nature of firm heterogeneity. Depending on whether firms differ in their mobile or immobile capabilities, cross-border mergers involve the most or the least efficient active firms. The comparative statics on industry and country characteristics display a similar dichotomy.
AB - We develop a general equilibrium model with heterogeneous firms to address two sets of questions: (1) what are the characteristics of firms that choose the various modes of foreign market access (exporting, greenfield FDI, and cross-border M&A), and (2) how does the international organization of production vary across industries and country-pairs? We show that the answers to these questions depend on the nature of firm heterogeneity. Depending on whether firms differ in their mobile or immobile capabilities, cross-border mergers involve the most or the least efficient active firms. The comparative statics on industry and country characteristics display a similar dichotomy.
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U2 - 10.1016/j.jinteco.2006.09.003
DO - 10.1016/j.jinteco.2006.09.003
M3 - Article
AN - SCOPUS:34248578180
SN - 0022-1996
VL - 72
SP - 336
EP - 365
JO - Journal of International Economics
JF - Journal of International Economics
IS - 2
ER -
