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On R&D Information Sharing and Merger

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  • Uday Bhanu Sinha

    (Delhi School of Economics)

Abstract

The paper deals with the issue of information sharing in a Cournot duopoly by an innovating firm in the face of a merger with its rival. The innovating firm would share information about the cost realization with its rival provided the market size is relatively small or, the R&D technology is relatively more efficient in a medium market size. However, in a large market, or in a medium market size with less efficient R&D technology, the innovating firm does not share information with its rival. We also show that the social welfare may be higher under incomplete information regime.

Suggested Citation

  • Uday Bhanu Sinha, 2006. "On R&D Information Sharing and Merger," Working papers 145, Centre for Development Economics, Delhi School of Economics.
  • Handle: RePEc:cde:cdewps:145
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    References listed on IDEAS

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    1. Esther Gal-or, 1986. "Information Transmission—Cournot and Bertrand Equilibria," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(1), pages 85-92.
    2. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    3. Stenbacka, L. Rune, 1991. "Mergers and investments in cost reduction with private information," International Journal of Industrial Organization, Elsevier, vol. 9(3), pages 397-405, September.
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    5. Vives, Xavier, 1990. "Information and competitive advantage," International Journal of Industrial Organization, Elsevier, vol. 8(1), pages 17-35.
    6. Sinha, Uday Bhanu, 2013. "On R&D information sharing and merger," Economic Modelling, Elsevier, vol. 32(C), pages 369-376.
    7. Aaditya Mattoo & Marcelo Olarreaga & Kamal Saggi, 2023. "Mode of foreign entry, technology transfer, and FDI policy," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 25, pages 567-583, World Scientific Publishing Co. Pte. Ltd..
    8. Eicher, Theo & Kang, Jong Woo, 2005. "Trade, foreign direct investment or acquisition: Optimal entry modes for multinationals," Journal of Development Economics, Elsevier, vol. 77(1), pages 207-228, June.
    9. James Markusen & Frank Stähler, 2011. "Endogenous market structure and foreign market entry," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 195-215, June.
    10. Esther Gal-Or, 1987. "First Mover Disadvantages with Private Information," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(2), pages 279-292.
    11. Larry D. Qiu & Shengzu Wang, 2011. "FDI Policy, Greenfield Investment and Cross‐border Mergers," Review of International Economics, Wiley Blackwell, vol. 19(5), pages 836-851, November.
    12. Jensen, Richard, 1993. "Sharing Cost Information: A Counterexample," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(3), pages 589-592, July.
    13. Kit Pong Wong & Tse, Maurice K. S., 1997. "Mergers and investments in cost reduction with private information revisited," International Journal of Industrial Organization, Elsevier, vol. 15(5), pages 629-634, August.
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    15. Lode Li, 1985. "Cournot Oligopoly with Information Sharing," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 521-536, Winter.
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    17. Carl Shapiro, 1986. "Exchange of Cost Information in Oligopoly," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 433-446.
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    Cited by:

    1. Chen, Feiqiong & Meng, Qiaoshuang & Li, Xueying, 2018. "Cross-border post-merger integration and technology innovation: A resource-based view," Economic Modelling, Elsevier, vol. 68(C), pages 229-238.
    2. Pu†yan Nie, 2018. "Comparing Horizontal Mergers Under Cournot with Bertrand Competitions," Australian Economic Papers, Wiley Blackwell, vol. 57(1), pages 55-80, March.
    3. Sinha, Uday Bhanu, 2013. "On R&D information sharing and merger," Economic Modelling, Elsevier, vol. 32(C), pages 369-376.
    4. Yin, Xundong & Wang, Sophie Xuefei & Lu, Yuanzhu & Yan, Jianye, 2023. "Endogenous information acquisition and disclosure of private information in a duopoly," Economic Modelling, Elsevier, vol. 126(C).
    5. Nie, Pu-yan & Wang, Chan & Wen, Hong-xing, 2021. "Horizontal mergers under uniform resource constraints," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    Information sharing; market size; R&D; merger and welfare.;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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