Mergers, innovation, and inequality

Guido Cozzi and Ornella Tarola

No 2004006, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper presents a standard endogenous growth framework in which the source of growth is represented by vertical innovation. The crucial assumption we introduce is that there is a positive information gap concerning the discovery of innovation. The aim of reducing the information dissemination lag provides incentives for firms to decide to merge their research efforts. At the same time we find that the skilled/unskilled wage gap is strongly related to this phenomenon. We prove that changing antitrust attitudes toward efficienc-motivated mergers in contestable industries may simultaneously explain observed changes in the industry structure, in qualitative innovation, in wage inequality, and in labor supply composition.

Keywords: growth; firm-size; innovation process; antitrust policy (search for similar items in EconPapers)
JEL-codes: L25 L40 O31 (search for similar items in EconPapers)
Date: 2004-02
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2004006

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