Strategic policy and international economic integration

José J. Sempere Monerris (), Rafael Moner Colonques () and Amparo Urbano
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José J. Sempere Monerris: Universitat de València
Rafael Moner Colonques: Universitat de València
Authors registered in the RePEc Author Service: José J. Sempere-Monerris

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In a context of economic integration, we analyse the strategic effect of wo policies: merger policy and state aid policy. When governments play a Stackelberg policy game before firms compete in the market we find that: a) only under certain conditions, the leader country chooses a merger policy and, b) there is a policy equivalence in welfare terms for the follower. A centralised policy decision is welfare improving relative to the strategic policy game and equals total welfare of the area under autarky. Besides, there always exists a social incentive to propose mergers and both, the state aid level and the state aid expenditure, are lower.

Keywords: Merger policy; state aid; market enlargement (search for similar items in EconPapers)
Pages: 34 pages
Date: 1999-04
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:1999-05

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