A Political Economy Model of Merger Policy in International Markets

30 Pages Posted: 20 Aug 2008

See all articles by Massimo Motta

Massimo Motta

Universitat Pompeu Fabra

Michele Ruta

Economic Research Division, WTO; Columbia Business School - Economics Department; International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2008


This paper looks at the political economy of merger policy under autarky and in international markets. We assume that merger policy is decided by antitrust authorities (whose objective is to maximize welfare) but can be influenced by governments, which are subject to lobbying by the firms (be they insiders or outsiders to the merger). We argue that political economy distortions may explain some of the recently observed merger policy conflicts between authorities and politicians, as well as between institutions belonging to different countries. We illustrate our analysis with applications motivated by recent merger cases, which have been widely debated in the international press.

Keywords: Antitrust policy, European Union, Lobbying, Mergers

JEL Classification: D72, F59, H11, L40

Suggested Citation

Motta, Massimo and Ruta, Michele, A Political Economy Model of Merger Policy in International Markets (June 2008). CEPR Discussion Paper No. DP6894, Available at SSRN: https://ssrn.com/abstract=1240204

Massimo Motta (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005

Michele Ruta

Economic Research Division, WTO ( email )

Rue de Lausanne 154
CH-1211 Geneva

HOME PAGE: http://www.iue.it/Personal/Fellows/MicheleRuta/Welcome.htm

Columbia Business School - Economics Department ( email )

420 West 118th Street
New York, NY 10027
United States

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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