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Innovation and social desirability of merger

Author

Listed:
  • Arijit Mukherjee

    (Loughborough University)

  • Prabal Roy chowdhury

    (Indian Statistical Institute)

Abstract

Although regulatory authorities are putting more emphasis to the long-run effects of mergers and acquisitions due to their effects on innovation, several merger proposals have been challenged due to their adverse innovation effects. In a simple model with endogenous R&D investment, we show that the effects of merger on the R&D investment, consumer surplus and social welfare depend on the degree of knowledge spillover and the slope of the marginal cost of doing R&D. Hence, the social desirability of merger may depend on the effectiveness of the patent system and the cost of innovation.

Suggested Citation

  • Arijit Mukherjee & Prabal Roy chowdhury, 2013. "Innovation and social desirability of merger," Economics Bulletin, AccessEcon, vol. 33(1), pages 348-360.
    • Handle: RePEc:ebl:ecbull:eb-12-00489
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    References listed on IDEAS

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    Cited by:

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    2. Dusanee Kesavayuth & Sang-Ho Lee & Vasileios Zikos, 2018. "Merger and Innovation Incentives in a Differentiated Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 25(2), pages 207-221, May.

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    Keywords

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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