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Cross-Border Merger & Acquisition Activity and Revealed Comparative Advantage in Manufacturing Industries


  • We thank Ralph Bayer, Carel Eijgenraam, Peter Neary, Richard Pomfret, Christis Tombazos, and seminar participants at the University of Adelaide, University Antwerp, Monash University, and the Tinbergen Institute for useful comments and suggestions. We thank Utz Weitzel and Julia Swart for useful suggestions and help with the Thomson data. Arjen van Witteloostuijn gratefully acknowledges the financial support through the Odysseus program of the Flemish Science Foundation (FWO).


We estimate an important implication of oligopolistic international trade modeling for the predicted pattern of cross-border mergers and acquisitions (M&As). Our core argument is that cross-border M&As are, among other factors, driven by cross-country differences in comparative advantage. We find strong evidence that acquiring firms operate in industries with a comparative advantage. We also report (less pronounced) evidence that this holds for target firms as well. We therefore add another explanation, rooted in international economics, to the industrial organization literature on M&As that emphasizes efficiency and strategic motives.