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Vertical mergers and the balance of trade
Author(s) -
Pan ChihMin
Publication year - 1995
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090160205
Subject(s) - balance (ability) , welfare , economics , variable (mathematics) , balance of trade , production (economics) , vertical integration , international economics , microeconomics , industrial organization , mathematics , market economy , medicine , mathematical analysis , physical medicine and rehabilitation
This paper examines the relationship between the vertical merger and the balance of trade. Our results show that the effects of the vertical merger on the trade balance and consumers' welfare depend on the production technology adopted by the final good manufacturers. The vertical merger will improve both the trade balance and consumers' welfare when fixed‐coefficient technology is adopted. However, these positive effects could not be held when variable‐coefficient technology is used to produce the final good.