Horizontal mergers, firm heterogeneity, and R&D investments

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Horizontal mergers, firm heterogeneity, and R&D investments

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Noriaki Matsushima
Yasuhiro Sato
Kazuhiro Yamamoto

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Abstract

We investigate the incentive and the welfare implications of a merger when heterogeneous oligopolists compete both in process R&D and on the product market. We examine how a merger affects the output, investment, and profits of firms, whether firms have merger incentives, and, if so, whether such mergers are desirable from the viewpoint of social welfare. We also derive equilibrium configurations and explore their welfare properties.

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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0754.

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Date of creation: Sep 2009
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Handle: RePEc:dpr:wpaper:0754

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This paper has been announced in the following NEP Reports:

NEP-ALL-2009-09-26 (All new papers)
NEP-COM-2009-09-26 (Industrial Competition)
NEP-IND-2009-09-26 (Industrial Organization)
NEP-INO-2009-09-26 (Innovation)
NEP-PKE-2009-09-26 (Post Keynesian Economics)
NEP-TID-2009-09-26 (Technology & Industrial Dynamics)

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Noriaki Matsushima & Yasuhiro Sato & Kazuhiro Yamamoto, 2008. "Trade and mergers in the presence of firm heterogeneity," Discussion Papers in Economics and Business 08-35, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
Kjell Erik Lommerud & Odd Rune Straume & Lars Sorgard, 2006. "National Versus International Mergers in Unionized Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 37(1), pages 212-233, Spring.
Other versions:
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Matsushima, Noriaki, 2001. "Horizontal Mergers and Merger Waves in a Location Model," Australian Economic Papers, Blackwell Publishing, vol. 40(3), pages 263-86, September. [Downloadable!] (restricted)

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