Duplicative research, mergers and innovation

Vincenzo Denicolo' () and Michele Polo

Economics Letters, 2018, vol. 166, issue C, 56-59

Abstract: We show that in the model of Federico et al. (2017) horizontal mergers may actually spur innovation by preventing duplication of R&D efforts. Federico et al. do not notice this result because they presume that the merged firm spreads its R&D expenditure evenly across the research units of the merging firms—a strategy which is optimal, however, only if the probability of failure is log-convex in the RD effort. The possibility that mergers spur innovation is more likely, the greater is the value of innovations and the less rapidly diminishing are the returns to R&D.

Keywords: Horizontal mergers; Innovation; R&D investment (search for similar items in EconPapers)
JEL-codes: L00 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

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Working Paper: Duplicative research, mergers and innovation (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:166:y:2018:i:c:p:56-59

DOI: 10.1016/j.econlet.2018.02.021

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