Mergers and Investments in New Products

Anna D’Annunzio (), Bruno Jullien, Yassine Lefouili () and Leonardo Madio ()
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Anna D’Annunzio: University of Rome-Tor Vergata
Bruno Jullien: Toulouse School of Economics
Yassine Lefouili: Toulouse School of Economics
Leonardo Madio: University of Padova

No 332, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: This paper examines how horizontal mergers affect firms’ incentives to invest in R&D leading to the development of new products. We characterize the impact of a merger to monopoly and a 3-to-2 merger on equilibrium innovation efforts and con- sumer surplus, absent efficiency gains and spillovers. We show that a 3-to-2 merger directly alters the outsider’s innovation incentives by shifting its best-response func- tion upward, and we analyze how this mechanism affects merger outcomes for inno- vation and consumer surplus. Finally, we examine how efficiency gains and remedies modify post-merger innovation efforts.

Keywords: : Horizontal Mergers; Product Innovation; R&D Investments. (search for similar items in EconPapers)
Pages: 41 pages
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0332

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