International Trade and the Propagation of Merger Waves

Abstract

We map the yearly global trade network and compare it to cross-border and domestic merger activity.  Trade-weighted merger activity in trading partner countries has significant explanatory power for the likelihood a country will be in a merger wave state, both at the cross-border and the domestic levels, even controlling for its own lagged merger activity.  The strength of trade as a channel for transmitting merger waves varies over time and is affected by import tariffs cuts, Euro, EU, EEA, and WTO entry. Overall, the full trade network increases our understanding of how merger waves form and propagate across borders