Template-Type: ReDIF-Paper 1.0
Author-Name:  Robin Kleer
Author-X-Name-First: Robin
Author-X-Name-Last: Kleer

Title: The Effect of Mergers on the Incentive to Invest in Cost Reducing Innovations
Abstract: Both mergers and innovation are central elements of a firm’s competitive strategy. However, model-theoretical
analysis of the merger-innovation link is sparse. The aim of this paper is to analyze the impact of mergers on
innovative activities and product market competition in the context of incremental process innovations.
Inefficiencies due to organizational problems of mergers are accounted for. We show that optimal investment
strategies depend on the resulting market structure and differ significantly from insider to outsider. In our linear
model mergers turn out to increase social surplus.
Length:  38 pages
Creation-Date:  2006-12
File-URL: http://www.bgpe.de/texte/DP/011_kleer.pdf
File-Format: Application/pdf
File-Function: First version, 2006
Number: 011
Classification-JEL: L13, L22, G34, O31
Keywords: Horizontal mergers, innovation, research joint venture, market structure
Handle: RePEc:bav:wpaper:011_kleer