Mergers in Patent Contest Models with Synergies and Spillovers

Peter-J. Jost and Claus van der Velden

Schmalenbach Business Review (sbr), 2006, vol. 58, issue 2, 157-179

Abstract: We consider mergers in an innovation contest between n firms in the presence of synergetic effects. We assume that a merger may affect the R&D efficiency of the merging firm due to increasing returns to scale in R&D. We show that mergers are beneficial for the merging firms even if the efficiency gains of the merging firms are not substantial, and that merging reduces R&D costs by only 6%. We also consider the influence of unintended knowledge flows in R&D. In the presence of knowledge spillovers, we show that higher efficiency gains are needed to make the merger profitable.

Keywords: Contest; Merger; Spillover; Synergies (search for similar items in EconPapers)
JEL-codes: L1 L25 O31 (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (6)

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