Mergers and Investments in New Products

Bruno Jullien, Yassine Lefouili, Anna D’Annunzio and Leonardo Madio

No 18-949, TSE Working Papers from Toulouse School of Economics (TSE)

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 consumer 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 function upward, and we analyze how this mechanism affects merger outcomes for innovation 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)
JEL-codes: K21 L13 L40 (search for similar items in EconPapers)
Date: 2018-08, Revised 2025-12
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-law and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:32923

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