A Simple Model of Mergers and Innovation

Giulio Federico, Gregor Langus and Tommaso Valletti

No 6539, CESifo Working Paper Series from CESifo

Abstract: We analyze the impact of a merger on firms’ incentives to innovate. We show that the merging parties always decrease their innovation efforts post-merger while the outsiders to the merger respond by increasing their effort. A merger tends to reduce overall innovation. Consumers are always worse off after a merger. Our model calls into question the applicability of the “inverted-U” relationship between innovation and competition to a merger setting.

Keywords: innovation; R&D; mergers (search for similar items in EconPapers)
JEL-codes: D43 G34 L40 O30 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cfn, nep-com, nep-ind, nep-ino and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (65)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp6539.pdf (application/pdf)

Related works:
Journal Article: A simple model of mergers and innovation (2017)
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:ces:ceswps:_6539

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().