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Horizontal mergers, firm heterogeneity, and R&D investments

  • Noriaki Matsushima
  • Yasuhiro Sato
  • Kazuhiro Yamamoto

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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File URL: http://www.iser.osaka-u.ac.jp/library/dp/2009/DP0754.pdf
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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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  1. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
  2. 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.
  3. 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).
  4. Horn, Henrik & Persson, Lars, 2001. "The equilibrium ownership of an international oligopoly," Journal of International Economics, Elsevier, vol. 53(2), pages 307-333, April.
  5. Farrell, Joseph & Shapiro, Carl, 1988. "Horizontal Mergers: An Equilibrium Analysis," Department of Economics, Working Paper Series qt0tp305nx, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  6. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
  7. Hijzen, Alexander & Görg, Holger & Manchin, Miriam, 2008. "Cross-border mergers and acquisitions and the role of trade costs," European Economic Review, Elsevier, vol. 52(5), pages 849-866, July.
  8. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-27, March.
  9. Carl Davidson & Ben Ferrett, 2007. "Mergers in Multidimensional Competition," Economica, London School of Economics and Political Science, vol. 74(296), pages 695-712, November.
  10. Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
  11. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
  12. Matsushima, Noriaki, 2001. "Horizontal Mergers and Merger Waves in a Location Model," Australian Economic Papers, Wiley Blackwell, vol. 40(3), pages 263-86, September.
  13. Qiu, Larry D. & Zhou, Wen, 2006. "International mergers: Incentives and welfare," Journal of International Economics, Elsevier, vol. 68(1), pages 38-58, January.
  14. Junichiro Ishida & Toshihiro Matsumura & Noriaki Matsushima, 2008. "When Market Competition Benefits Firms," OSIPP Discussion Paper 08E011, Osaka School of International Public Policy, Osaka University.
  15. Fumagalli, Eileen & Vasconcelos, Helder, 2009. "Sequential cross-border mergers," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 175-187, March.
  16. Barros, Pedro Pita, 1998. "Endogenous mergers and size asymmetry of merger participants," Economics Letters, Elsevier, vol. 60(1), pages 113-119, July.
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