Séminaire Nancy – Yassine Lefouili (TSE)

Détails de l'événement :

“Mergers and Demand-Enhancing Innovation” with Marc Bourreau and Bruno Jullien

Abstract: We study the impact of horizontal mergers on merging firms’ incentives to invest in demand-enhancing innovation. In our baseline model, we identify four effects of a symmetric merger on these incentives: the innovation diversion effect, the margin expansion effect, the demand expansion effect, and the per unit return to innovation effect. We offer sufficient conditions for a merger to reduce or raise merging firms’ incentives to innovate in the absence of spillovers and efficiency gains in R&D, and find that the comparison of the innovation diversion and price diversion ratios is informative about the impact of a merger on innovation.