Domestic and Cross-border Acquisitions by Multinationals under Trade Liberalization Amrita

This paper models a multinational …rm’s (MNE’s) choices to acquire/sell a productive asset in multiple markets. In line with evidence, the model predicts that volumes of domestic and cross-border acquisitions are positively correlated and that more domestic acquisitions are realized in equilibrium. The more asymmetric the pre-liberalization asset holdings of the MNE across home and foreign markets, the more likely that trade liberalization results in domestic acquisitions. These are accompanied by cross-border acquisitions only if additional conditions are satis…ed, e.g., if the MNE’s residual demand is su¢ ciently large in foreign markets. These acquisitions may harm consumers by raising product prices across multiple