Myopic Mergers across Borders with Incomplete Information in GOLE

What is it about?

We demonstrate that ex-ante gains from myopic mergers between firms with incomplete information about rival’s cost are larger when the difference between unknown components of their costs is wider. We also show that ex-ante gains from myopic mergers between firms across countries with large differences in factor endowments, ceteris paribus, would be greater than the ex-ante gains from mergers between countries with relatively similar factor endowments.

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Why is it important?

This framework allows us to parsimoniously link incomplete information and mergers in general equilibrium.