How mergers affect innovation: Theory and evidence
Justus Haucap,
Alexander Rasch and
Joel Stiebale
International Journal of Industrial Organization, 2019, vol. 63, issue C, 283-325
Abstract:
This article analyses how horizontal mergers affect innovation of the merged entity and its non-merging competitors. Using data on horizontal mergers among pharmaceutical firms in Europe and applying propensity score matching estimators, we find that average patenting and R&D of the merged entity and its rivals declines substantially in post-merger periods. We show that this result is consistent with the predictions from an oligopoly model with heterogeneous firms, as well as a patent race model, when pre-merger R&D intensity is sufficiently high. Consistent with our theoretical model, we find that negative effects of mergers on innovation are concentrated in markets with high R&D intensity and in technology classes with overlap in pre-merger innovation activities of merging and rival firms.
Keywords: Mergers & acquisitions; Merger policy; Innovation; R&D incentives (search for similar items in EconPapers)
JEL-codes: D22 L13 L40 L65 O31 O32 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (35)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718717303685
Full text for ScienceDirect subscribers only
Related works:
Working Paper: How Mergers A ffect Innovation: Theory and Evidence (2013) 
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:indorg:v:63:y:2019:i:c:p:283-325
DOI: 10.1016/j.ijindorg.2018.10.003
Access Statistics for this article
International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal
More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().