TY  - JOUR
AU  - Nocke,Volker
AU  - Yeaple,Stephen
TI  - Mergers and the Composition of International Commerce
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10405
PY  - 2004
Y2  - April 2004
UR  - http://www.nber.org/papers/w10405
L1  - http://www.nber.org/papers/w10405.pdf
N1  - Author contact info:
Volker Nocke
Department of Economics
University of Mannheim
68131 Mannheim
Germany
Tel: +49-0621-1811836
E-Mail: nocke@uni-mannheim.de

Stephen Yeaple
Department of Economics
The Pennsylvania State University
520 Kern Building
University Park, PA 16802-3306
Tel: 8148655452
E-Mail: sry3@psu.edu
AB  - In this paper, we develop a novel theory of cross-border mergers and acquisitions. Firms can choose between different modes of foreign market access: exporting, greenfield FDI, and cross-border M&A. Our theory is based on three key ideas. First is heterogeneity in firms' capabilities. Second, these capabilities differ in their degree of international mobility. Third, capabilities are traded in a merger market. We address two questions: (1) what are the characteristics of firms that choose the various modes of foreign market access, and (2) how does the composition of international commerce vary across industries and countries? We show that the degree to which firms differ in their mobile and non-mobile capabilities plays a crucial role for the composition of international commerce: depending on whether firms differ in their mobile or immobile capabilities, cross-border mergers may involve the most or the least efficient active firms. A similar dichotomy obtains when analyzing the effects of country and industry characteristics on the distribution of firms' efficiencies.
ER  -