Merger and process innovation

Arijit Mukherjee

Economics Letters, 2022, vol. 213, issue C

Abstract: Denicolò and Polo (2018) show that the result of Federico et al. (2017), i.e., horizontal mergers reduce R&D investments of the merged firms compared to non-cooperation, holds provided the probability of failure in R&D is log-convex in R&D investments. We provide a different reason for innovation raising merger. We show that if firms invest in process innovation, merger may increase R&D investments even if the probability of failure in R&D is log-convex in R&D investments as considered in Federico et al. (2017). We also show that merger may increase expected consumer surplus and expected welfare compared to non-cooperation. Our results are important for antitrust policies.

Keywords: Innovation; Merger; Welfare (search for similar items in EconPapers)
JEL-codes: D43 G34 L00 O30 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176522000520
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:213:y:2022:i:c:s0165176522000520

DOI: 10.1016/j.econlet.2022.110366

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().