Article ID Journal Published Year Pages File Type
962908 Journal of International Economics 2006 21 Pages PDF
Abstract
Information asymmetry creates incentives for firms from different countries to merge. To demonstrate this point, we develop a model of international oligopolistic competition under demand uncertainty and asymmetric information. We show that when domestic firms but not foreign firms are completely informed of local market demands, information sharing enhances the profitability of a merger between a domestic firm and a foreign firm. We also examine how such a merger affects the non-merging firms' profits, consumer surplus and social welfare.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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