Economics Seminar（2017-09）

Topic:Trade Liberalization and Domestic Vertical Integration: Evidence from China

Speaker:Qing Liu

Time:Tuesday, November 7, 13:00—15:00

Place:Room 216, Guanghua Building 2

Abstract:

In this study we examine the effects of trade liberalization on domestic mergers and acquisitions (M&As) in China. In particular, we focus on domestic backward vertical integrations in which a domestic upstream firm (target) is acquired by a domestic downstream firm. Our analysis takes China’s accession to the WTO (2001) as a quasi-natural experiment for trade liberalization. We find that a decrease in tariffs on the target industry’s outputs reduces vertical integrations, but a decrease in tariffs on the target industry’s inputs increases vertical integrations. The result is obtained using the difference-in-differences technique and is robust to various specifications of the model and measurement. We build a hold-up model with an upstream supplier and a downstream buyer to provide insights to the empirical finding that the existence of underinvestment is the key to understanding the effects of tariffreductions on firms’ organizational choices.

Introduction:

Qing Liu is a Professor of Economics, University of International Business and Economics (UIBE). His research Interest are International Trade and Investment (FDI, Cross-border Mergers and Acquisitions);Multinational Enterprises (MNEs);Globalization and Innovation;Globalization and China Economy.

//qingliu.weebly.com/

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