To Merge or to License: Implications for Competition Policy
The optimal merger policy when efficiency gains are not merger specific but can also be achieved through licensing is derived in a differentiated goods Cournot duopoly. We show that whenever both royalties and fees are feasible instruments to license technology, mergers should not be allowed, which fits the prescription of the U.S. Horizontal Merger Guidelines. When only one instrument is feasible, however, the possibility of licensing cannot be used as a definitive argument against mergers.
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- Farrell, Joseph & Shapiro, Carl, 1990.
"Horizontal Mergers: An Equilibrium Analysis,"
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"The Role of Information in Licensing Contract Design,"
UFAE and IAE Working Papers
216.93, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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