We study the profitability incentives for merger and the endogenous industry structure in a strategic trade policy … environment. Merger changes the strategic trade policy equlilibrium. We show that merger can be profitable and welfare enhancing … to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger …

We show that the presence of a strategic tax policy increases the incentive for a horizontal merger compared to the … a horizontal merger that has been ignored in the existing literature. In contrast to the usual belief, we also show that … a horizontal merger may benefit the consumers and the society. …