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Empirical Analysis of the Assessment of Innovation Effects in U.S. Merger Cases

Listed author(s):
  • Benjamin R. Kern

    ()

    (Philipps-University Marburg)

  • Ralf Dewenter

    ()

    (Helmut Schmidt University Hamburg)

  • Wolfgang Kerber

    ()

    (Philipps-University Marburg)

Abstract In merger policy it is still an open question how the negative effects of mergers on innovation should be assessed. In this empirical study all mergers that were challenged by the U.S. antitrust agencies FTC and DOJ between 1995 and 2008 were analyzed in regard to the question to what extent and how the agencies assessed the innovation effects of mergers. The study also contributes to the discussion about differences and convergence in the merger assessments of the two agencies FTC and DOJ. Our results show (1) that in one third of all challenged mergers also innovation concerns have been raised (with no significant differences between the agencies). (2) Despite the wide-spread rejection of the “innovation market approach” in the antitrust debate the agencies used more often an innovation-specific assessment approach that includes also innovation in the market definition than the traditional product market concept. (3) Overall, we found both significant similarities and differences as well as some convergence over time in regard to the specifics of the assessment of innovation effects of mergers between both agencies.

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File URL: http://link.springer.com/10.1007/s10842-016-0225-0
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Article provided by Springer in its journal Journal of Industry, Competition and Trade.

Volume (Year): 16 (2016)
Issue (Month): 3 (September)
Pages: 373-402

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Handle: RePEc:kap:jincot:v:16:y:2016:i:3:d:10.1007_s10842-016-0225-0
DOI: 10.1007/s10842-016-0225-0
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Order Information: Web: http://www.springer.com/economics/industrial+organization/journal/10842/PS2

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  1. Gilbert, Richard & Tom, Willard K, 2001. "Is Innovation King at the Antitrust Agencies? The Intellectual Property Guidelines Five Years Later," Department of Economics, Working Paper Series qt4mf5t2bm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 701-728.
  3. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
  4. Partha Dasgupta & Joseph Stiglitz, 1980. "Uncertainty, Industrial Structure, and the Speed of R&D," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 1-28, Spring.
  5. Peneder, Michael, 2010. "Technological regimes and the variety of innovation behaviour: Creating integrated taxonomies of firms and sectors," Research Policy, Elsevier, vol. 39(3), pages 323-334, April.
  6. Tom Lee & Louis L. Wilde, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, Oxford University Press, vol. 94(2), pages 429-436.
  7. Kent Bernard, 2011. "Innovation Market Theory and Practice: An Analysis and Proposal for Reform," CPI Journal, Competition Policy International, vol. 7.
  8. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
  9. Walter Park & Ralph Sonenshine, 2012. "Impact of Horizontal Mergers on Research & Development and Patenting: Evidence from Merger Challenges in the U.S," Journal of Industry, Competition and Trade, Springer, vol. 12(1), pages 143-167, March.
  10. Richard R. Nelson, 1995. "Recent Evolutionary Theorizing about Economic Change," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 48-90, March.
  11. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  12. Boone, Jan, 2001. "Intensity of competition and the incentive to innovate," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 705-726, April.
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