Effects of "Anti-Competitive" Mergers in R&D Intensive Industries
The effect of merger between competing firms in the same industry is twofold. It increases concentration, which has a negative effect on welfare unless the merger substantially lowers production costs. If products are differentiated, however, there is another effect: before the product is marketed, rationally foresighted firms will choose R&D strategies which will defer price competition in the marketing stage. In the presence of exclusive patent rights, the firms are more likely to "cluster" (i.e. develop the same product) when owned separately, each firm attempting to pre-empt its competitors so as to monopolize the market, as opposed to when controlled jointly. Therefore mergers among firms at the R&D stage are potentially welfare-enhancing. We show that the dominance relation between these two effects, which determines the welfare-optimality of the shareholding structure, is non-monotone in R&D costs as well as in intertemporal preferences.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1999|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia|
Phone: +61 3 8344 5355
Fax: +61 3 8344 6899
Web page: http://fbe.unimelb.edu.au/economics
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:709. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Katherine Perez)
If references are entirely missing, you can add them using this form.