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Trade liberalization and industrial restructuring through mergers and acquisitions

Breinlich, Holger (2008) 'Trade liberalization and industrial restructuring through mergers and acquisitions.' Journal of International Economics, 76 (2). pp. 254-266. ISSN 0022-1996

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Abstract

This paper analyzes mergers and acquisitions (M&As) as a channel of industrial restructuring after trade liberalization. Using the Canada-United States Free Trade Agreement (CUSFTA) of 1989 as a source of exogenous variation in trade barriers, I show that trade liberalization increased domestic Canadian M&A activity (Canadian firms buying other Canadian firms) by over 70%. There is no robust link between tariff reductions and either domestic U.S. or cross-border M&As. I also provide evidence that domestic M&As transferred resources from less to more productive firms and that the magnitude of the overall transfer was quantitatively important.

Item Type: Article
Uncontrolled Keywords: Mergers and acquisitions; Trade liberalization; Restructuring; International trade; Canada-United States Free Trade Agreement
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 03 Jul 2012 14:14
Last Modified: 03 Jul 2012 14:14
URI: http://repository.essex.ac.uk/id/eprint/2716

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