Market Structure and Innovation: A Dynamic Analysis of the Global Automobile Industry
Johannes Van Biesebroeck () and
Aamir Hashmi ()
No 362, 2007 Meeting Papers from Society for Economic Dynamics
Since the global auto industry has seen a lot of consolidation since 1980, mergers are an important ingredient of our model. After estimating the parameters of the model, we simulate the industry forward and study how changing market structure (mainly due to mergers) affects innovative activity at the firm as well as the industry level. Our findings are the following. (1) The effect of market structure on innovation in the global auto industry depends on the initial state of the industry. If the industry is not very concentrated, as it was in 1980, some consolidation may increase the innovative activity. However, if the industry is already concentrated, as in 2005, further consolidation may reduce the innovation incentives. (2) Mergers reduce the value of merging firms though they may increase the aggregate value of the industry. (3) Mergers between big firms eventually reduce consumers’ utility.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
Working Paper: Market Structure and Innovation: A Dynamic Analysis of the Global Automobile Industry (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:sed007:362
Access Statistics for this paper
More papers in 2007 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().