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National champions and globalization

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  • Jens Südekum
Abstract
In this paper, we offer an explanation why globalization (falling trade costs) may increase the government incentive to block foreign takeover of domestic firms and increase its incentive to allow mergers among national firms. This creation of ‘national champions’ occurs not only because the government may have a bias against foreign takeover, but also because consumer welfare gains associated with foreign acquisitions decrease with globalization. Endogenizing the government bias through lobbying efforts of the domestic firms, the paper shows that the bias does not need to be very strong before the government promotes domestic champions provided that barriers to trade are low. Dans ce mémoire, on offre une explication de pourquoi la mondialisation (coûts de commerce en déclin) peut accroître la propension du gouvernement à bloquer la prise de contrôle de firmes domestiques par des intérêts étrangers et la propension à permettre des fusions de firmes nationales. Cette création de ≪ champions nationaux ≫ se produit non seulement parce que le gouvernement a un malaise face aux prises de contrôle par des intérêts étrangers, mais aussi parce que les gains de bien‐être des consommateurs associés aux acquisitions par des intérêts étrangers décroîssent avec la mondialisation. En endogénéisant ce malaise du gouvernement attribuable au lobbying des firmes domestiques, on montre que ce malaise n'a pas besoin d'être très fort pour que le gouvernement promeuve les champions nationaux à condition que les barrières commerciales soient faibles.

Suggested Citation

  • Jens Südekum, 2010. "National champions and globalization," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(1), pages 204-231, February.
    • Handle: RePEc:wly:canjec:v:43:y:2010:i:1:p:204-231
    DOI: 10.1111/j.1540-5982.2009.01569.x
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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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