MEXICO: EMPIRICAL EVIDENCE

The recent 'open-economy industrial organization' literature generally finds export-orientation to enhance the weight of post-merger international competitive gains; thereby, favoring lenient domestic merger policy. We observe, however, that mergers seldom generate the 'significant synergies' that are supportive of international competitive gains. Further, we explore a joint-economies of production effect which suggests that domestic mergers tend to generate international competitive losses (not gains). Accordingly, we contend that export-orientation favors strict (not lenient) domestic merger policy. In order to support this contention, we develop a model illustrative of how non-synergistic domestic mergers in the presence of international sales might reduce national welfare and incur stringent merger-reviews. Further, using a panel data set composed of U.S. merger policy by manufacturing sector over the 1990-2001 period, we empirically support export-orientation leading to strict merger policy.

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