Mergers and investments: where do we stand ?

Yassine Lefouili and Leonardo Madio
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Yassine Lefouili: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse
Leonardo Madio: University of Padova, Padova, Italy.

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Abstract: In this paper, we review recent studies on the impact of mergers on investments. We begin by examining how mergers among competing incumbents inf luence firms' incentives to develop new products and undertake cost-reducing or quality-enhancing investment. We then analyze how an incumbent's acquisition of an innovative entrant affects the investment incentives of both parties. Next, we discuss the effects of vertical mergers on the investment decisions of both upstream and downstream firms. Finally, we highlight several policy-relevant insights from the literature and suggest directions for future research.

Keywords: Entry; Mergers; Innovation; Investment; Competition (search for similar items in EconPapers)
Date: 2026-04
New Economics Papers: this item is included in nep-com, nep-mic and nep-reg
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Published in International Journal of Industrial Organization, 2026, 105, pp.103269. ⟨10.1016/j.ijindorg.2026.103269⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05543677

DOI: 10.1016/j.ijindorg.2026.103269

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