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Preprints, Working Papers, ... Year : 2018

Mergers and demand-enhancing innovation

Abstract

We study the impact of horizontal mergers on merging firms’ incentives to invest in demand-enhancing innovation. In our baseline model, we identify four effects of a symmetric merger on these incentives: the innovation diversion effect, the margin expansion effect, the demand expansion effect, and the per unit return to innovation effect. We offer succient conditions for a merger to reduce or raise merging firms’ incentives to innovate in the absence of spillovers and effciency gains in R&D, and find that a comparison between the innovation diversion and price diversion ratios is informative about the impact of a merger on innovation.
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Dates and versions

hal-04548184 , version 1 (16-04-2024)

Identifiers

  • HAL Id : hal-04548184 , version 1

Cite

Marc Bourreau, Bruno Jullien, Yassine Lefouili. Mergers and demand-enhancing innovation. 2024. ⟨hal-04548184⟩
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