Europe Integrates Less Than You Think - Evidence from the Market for Corporate Control in Europe and the US

National borders are still strong barriers for mergers and acquisitions inEurope. We estimate a gravity equation model based on NUTS 2-regionsand find that the restraining impact of national borders decreased byabout a third between 1990 and 2007. However, there has been nosignificant change since 1997, i.e., two years before the introduction of the Euro. To benchmark our results we run a corresponding analysis within the United States using the ten federal OMB regions as countryequivalents. The ‘quasi border’-effect in the US is weaker than in the EUand even declines more during the same time period. We conclude thatEuropean integration policy has little effect on fostering cross-bordertransactions...