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Merger Policy and Innovation: Must Enforcement Change to Account for Technological Change?

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  • Michael L. Katz
  • Howard A. Shelanski

Abstract

Merger policy is the most active area of U.S. antitrust policy. It is now widely believed that merger policy must move beyond its traditional focus on static efficiency to account for innovation and address dynamic efficiency. Innovation can fundamentally affect merger analysis in two ways. First, innovation can dramatically affect the relationship between the pre-merger marketplace and what is likely to happen if a proposed merger is consummated. Thus, innovation can fundamentally influence the appropriate analysis for addressing traditional, static efficiency concerns. Second, innovation can itself be an important dimension of market performance that is potentially affected by a merger. We explore how merger policy is meeting the challenges posed by innovation.

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  • Michael L. Katz & Howard A. Shelanski, 2004. "Merger Policy and Innovation: Must Enforcement Change to Account for Technological Change?," NBER Working Papers 10710, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10710
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    Cited by:

    1. Gilbert Richard J, 2006. "Competition and Innovation," Journal of Industrial Organization Education, De Gruyter, vol. 1(1), pages 1-23, December.
    2. Jochen Lorentzen & Peter Møllgaard, 2006. "Competition Policy and Innovation," Chapters, in: Patrizio Bianchi & Sandrine Labory (ed.), International Handbook on Industrial Policy, chapter 6, Edward Elgar Publishing.
    3. Tianxu Jiang & Min Zhu, 2021. "The impact of innovation on companies’ cross-border mergers and acquisitions: evidence from China," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(3), pages 969-991, June.
    4. Mas, Nuria & Valentini, Giovanni, 2012. "The importance of technology in the consolidation of hospital markets. The case of the United States," IESE Research Papers D/953, IESE Business School.
    5. Ornaghi, Carmine, 2006. "Mergers and innovation: the case of the pharmaceutical industry," Discussion Paper Series In Economics And Econometrics 605, Economics Division, School of Social Sciences, University of Southampton.
    6. Norbäck, Pehr-Johan & Persson, Lars, 2012. "Entrepreneurial innovations, competition and competition policy," European Economic Review, Elsevier, vol. 56(3), pages 488-506.
    7. Gamal Atallah, 2016. "Endogenous Efficiency Gains from Mergers," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 202-235, July.
    8. Ganslandt, Mattias, 2008. "Intellectual Property Rights and Competition Policy," Working Paper Series 726, Research Institute of Industrial Economics.
    9. Ornaghi, Carmine, 2009. "Mergers and innovation in big pharma," International Journal of Industrial Organization, Elsevier, vol. 27(1), pages 70-79, January.
    10. Gao, Tingfan & Wang, Shixun & Chen, Baizhu & Yang, Lihong, 2024. "The impact of big tech corporate venture capital investments on innovation: Evidence from the equity investment market," China Economic Review, Elsevier, vol. 83(C).
    11. Van Beers, Cees & Dekker, Ronald, 2009. "Acquisitions, Divestitures and Innovation Performance in the Netherlands," MPRA Paper 13464, University Library of Munich, Germany.
    12. Ornaghi, Carmine, 2006. "Mergers and innovation: the case of the pharmaceutical industry," Discussion Paper Series In Economics And Econometrics 0605, Economics Division, School of Social Sciences, University of Southampton.
    13. Xavier Boutin, 2015. "Mergers and the Dynamics of Innovation," Working Papers ECARES ECARES 2015-15, ULB -- Universite Libre de Bruxelles.
    14. Olivier Bertrand & Katariina Nilsson Hakkala & Pehr-Johan Norbäck & Lars Persson, 2012. "Should countries block foreign takeovers of R&D champions and promote greenfield entry?," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 1083-1124, August.
    15. Marc Bourreau & Yutec Sun, 2022. "Competition and Quality: Evidence from the Entry of Mobile Network Service," Working Papers 22-04, NET Institute.
    16. Robin Kleer, 2012. "The effect of mergers on the incentive to invest in cost-reducing innovations," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(3), pages 287-322, April.
    17. Giulio Federico & Fiona Scott Morton & Carl Shapiro, 2020. "Antitrust and Innovation: Welcoming and Protecting Disruption," Innovation Policy and the Economy, University of Chicago Press, vol. 20(1), pages 125-190.
    18. Carl Shapiro, 2011. "Competition and Innovation: Did Arrow Hit the Bull's Eye?," NBER Chapters, in: The Rate and Direction of Inventive Activity Revisited, pages 361-404, National Bureau of Economic Research, Inc.
    19. Mahdiyeh Entezarkheir & Saeed Moshiri, 2019. "Is innovation a factor in merger decisions? Evidence from a panel of US firms," Empirical Economics, Springer, vol. 57(5), pages 1783-1809, November.
    20. Marshall, Guillermo & Parra, Álvaro, 2019. "Innovation and competition: The role of the product market," International Journal of Industrial Organization, Elsevier, vol. 65(C), pages 221-247.
    21. Mahdiyeh Entezarkheir & Saeed Moshiri, 2021. "Innovation spillover and merger decisions," Empirical Economics, Springer, vol. 61(5), pages 2419-2448, November.
    22. Richard Gilbert, 2006. "Looking for Mr. Schumpeter: Where Are We in the Competition-Innovation Debate?," NBER Chapters, in: Innovation Policy and the Economy, Volume 6, pages 159-215, National Bureau of Economic Research, Inc.

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    • L4 - Industrial Organization - - Antitrust Issues and Policies

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