Innovation and social desirability of merger

Arijit Mukherjee and Prabal Roy Chowdhury ()

Economics Bulletin, 2013, vol. 33, issue 1, 348-360

Abstract: Although regulatory authorities are putting more emphasis to the long-run effects of mergers and acquisitions due to their effects on innovation, several merger proposals have been challenged due to their adverse innovation effects. In a simple model with endogenous R&D investment, we show that the effects of merger on the R&D investment, consumer surplus and social welfare depend on the degree of knowledge spillover and the slope of the marginal cost of doing R&D. Hence, the social desirability of merger may depend on the effectiveness of the patent system and the cost of innovation.

Keywords: Innovation; Merger; Welfare (search for similar items in EconPapers)
JEL-codes: L1 O3 (search for similar items in EconPapers)
Date: 2013-02-15
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Citations: View citations in EconPapers (2)

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