NO : WP-2018-009
AUTHOR : Piuli Roy Chowdhury
TITLE : A new model of mergers and innovation
This paper reexamines the impact of merger on innovation. Unlike as in Federico et al (2017), it considers the scenario where merged firms combine their research labs. It shows that, in equilibrium, each firm chooses a higher R&D effort after the merger, while industry effort may rise or fall due to the merger. Furthermore, it shows that given a sufficient condition, profits of the merged
firm falls and consumer surplus rises in the post merger scenario. These results are in sharp contrast to the findings of Federico et al (2017).
Keywords :Innovation, R&D, Mergers
JEL Code :D43, G34, L40, O30