Mergers in Patent Contest Models with Synergies and Spillovers
AbstractWe consider mergers in an innovation contest between n firms in the presence of synergetic effects. We assume that a merger may affect the R&D efficiency of the merging firm due to increasing returns to scale in R&D. We show that mergers are beneficial for the merging firms even if the efficiency gains of the merging firms are not substantial, and that merging reduces R&D costs by only 6%. We also consider the influence of unintended knowledge flows in R&D. In the presence of knowledge spillovers, we show that higher efficiency gains are needed to make the merger profitable.
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Bibliographic InfoArticle provided by LMU Munich School of Management in its journal Schmalenbach Business Review.
Volume (Year): 58 (2006)
Issue (Month): 2 (April)
Contest; Merger; Spillover; Synergies;
Find related papers by JEL classification:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
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- Robin Kleer, 2009. "Acquisitions in a Patent Contest Model with Large and Small Firms," Journal of Industry, Competition and Trade, Springer, vol. 9(4), pages 307-328, December.
- Jost, Peter-J., 2011. "Joint ventures in patent contests with spillovers and the role of strategic budgeting," Journal of Economics and Business, Elsevier, vol. 63(6), pages 605-637.
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