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Cross-ownership, R&D Spillovers, and Antitrust Policy

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This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with minority shareholdings. We fi…nd that, with high market concentration and sufficiently convex demand, there is no scope for cross-ownership to improve welfare regardless of spillover levels. Otherwise, there is scope for cross-ownership provided that spillovers are sufficiently large. The socially optimal degree of cross-ownership increases with the number of …firms, with the elasticity of demand and of the innovation function, and with the extent of spillover effects. In terms of consumer surplus standard, the scope for cross-ownership is greatly reduced even under low market concentration.

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  • López, Ángel L. & Vives, Xavier, 2016. "Cross-ownership, R&D Spillovers, and Antitrust Policy," IESE Research Papers D/1140, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-1140
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    File URL: http://www.iese.edu/research/pdfs/WP-1140-E.pdf
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    Cited by:

    1. Bourreau, Marc & Jullien, Bruno & Lefouili, Yassine, 2018. "Mergers and Demand-Enhancing Innovation," TSE Working Papers 18-907, Toulouse School of Economics (TSE), revised Apr 2021.
    2. Etro, Federico, 2019. "Mergers of complements and entry in innovative industries," International Journal of Industrial Organization, Elsevier, vol. 65(C), pages 302-326.
    3. Samuel Haas & Johannes Paha, 2021. "Non-Controlling Minority Shareholdings and Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 431-454, May.
    4. Federico, Giulio & Langus, Gregor & Valletti, Tommaso, 2017. "A simple model of mergers and innovation," Economics Letters, Elsevier, vol. 157(C), pages 136-140.
    5. Bruno Jullien & Yassine Lefouili, 2018. "Horizontal mergers and innovation," Post-Print hal-03263838, HAL.
    6. Motta, Massimo & Tarantino, Emanuele, 2021. "The effect of horizontal mergers, when firms compete in prices and investments," International Journal of Industrial Organization, Elsevier, vol. 78(C).
    7. Sven Heim & Kai Hhschelrath & Ulrich Laitenberger & Yossi Spiegel, 2017. "Minority Share Acquisitions and Collusion: Evidence from the Introduction of National Leniency Programs," Working Papers hal-01952937, HAL.
    8. Benno Buehler & Daniel Coublucq & Cyril Hariton & Gregor Langus & Tommaso Valletti, 2017. "Recent Developments at DG Competition: 2016/2017," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(4), pages 397-422, December.
    9. Bárcena-Ruiz, Juan Carlos & Campo, María Luz, 2017. "Taxes versus standards under cross-ownership," Resource and Energy Economics, Elsevier, vol. 50(C), pages 36-50.

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    More about this item

    Keywords

    competition policy; partial merger; collusion; innovation; minority shareholdings;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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