Publication

This paper models the situations in which a technology leader from a small country acquires a laggard from a large country and vice versa. The authors apply a two-firm, two-country Cournot model, where firms enter new markets via Greenfield FDI or acquisition. The model takes into account both technological and market size asymmetries and allows for mergers and acquisitions transaction costs like corporate finance and legal fees. The authors show that to be the acquirer, a firm from a small country needs a strong technological lead and the ability to exploit it on a global scale.