Mergers in Innovative Industries

Download or read book Mergers in Innovative Industries written by Guillermo Marshall and published by . This book was released on 2016 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study how competition affects innovation (and welfare) when firms compete both in the product market and in innovation development. This relationship is complex and may lead to scenarios in which a lessening of competition increases R&D and consumer welfare in the long run, which is in contrast to arguments provided by antitrust agencies in recent merger cases. We provide conditions for when a merger increases industry innovation and when evaluating mergers based on static price effects is aligned with a fully dynamic merger evaluation. These conditions are based on properties of the product market payoffs.