Conflict between national competition policies is likely to increase with globalization. In this paper we develop a two-country, three-firm model to analyze the possibilities of conflict between national antitrust authorities. We show that if countries maximize their national welfare there is a possibility of conflict that blocks welfare-enhancing mergers. We also show that convergence to a reference standard based on global welfare or consumer surplus resolve conflicts but may not always lead to an efficient outcome. Efficiency can be ensured through transfer payments coupled with the total welfare standard. We argue that there is scope for institutions like WTO to assume the role of supranational authority to ensure conflict-free, efficient outcomes.
- Cross border merger,