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Mergers and Investments in New Products

Author

Listed:
  • Anna D’Annunzio

    (University of Rome-Tor Vergata)

  • Bruno Jullien

    (Toulouse School of Economics)

  • Yassine Lefouili

    (Toulouse School of Economics)

  • Leonardo Madio

    (University of Padova)

Abstract

This paper examines how horizontal mergers affect firms’ incentives to invest in R&D leading to the development of new products. We characterize the impact of a merger to monopoly and a 3-to-2 merger on equilibrium innovation efforts and con- sumer surplus, absent efficiency gains and spillovers. We show that a 3-to-2 merger directly alters the outsider’s innovation incentives by shifting its best-response func- tion upward, and we analyze how this mechanism affects merger outcomes for inno- vation and consumer surplus. Finally, we examine how efficiency gains and remedies modify post-merger innovation efforts.

Suggested Citation

  • Anna D’Annunzio & Bruno Jullien & Yassine Lefouili & Leonardo Madio, "undated". "Mergers and Investments in New Products," "Marco Fanno" Working Papers 0332, Dipartimento di Scienze Economiche "Marco Fanno".
    • Handle: RePEc:pad:wpaper:0332
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