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Mergers in Patent Contest Models with Synergies and Spillovers

Author

Listed:
  • Peter-J. Jost
  • Claus van der Velden

Abstract

We 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.

Suggested Citation

  • Peter-J. Jost & Claus van der Velden, 2006. "Mergers in Patent Contest Models with Synergies and Spillovers," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 58(2), pages 157-179, April.
  • Handle: RePEc:sbr:abstra:v:58:y:2006:i:2:p:157-179
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    Cited by:

    1. Jost, Peter-J. & van der Velden, Claus, 2008. "Organizational design of R&D after mergers and the role of budget responsibility," Journal of Economics and Business, Elsevier, vol. 60(5), pages 469-484.
    2. 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.
    3. Robin Kleer, 2008. "Acquisitions in a Patent Contest Model with Large and Small Firms," Working Papers 061, Bavarian Graduate Program in Economics (BGPE).
    4. 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.

    More about this item

    Keywords

    Contest; Merger; Spillover; Synergies;

    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, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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