Working Paper: CEPR ID: DP12773
Authors: Bruno Jullien; Yassine Lefouili
Abstract: This paper discusses the effects of horizontal mergers on innovation. We rely on the existing academic literature and our own research work to present the various positive and negative effects of mergers on innovation. Our analysis shows that the overall impact of a merger on innovation may be either positive or negative and sheds light on the circumstances under which each of these scenarios is likely to arise. We derive a number of policy implications regarding the way innovation effects should be handled by competition authorities in merger control and highlight the differences with the analysis of price effects.
Keywords: merger; policy; innovation; R&D; investments
JEL Codes: K21; L13; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mergers (G34) | innovation diversion effect (O39) |
| innovation diversion effect (O39) | R&D investment (O32) |
| post-merger margins (G34) | demand-enhancing innovations (O39) |
| mergers (G34) | margin expansion effect (E11) |
| margin expansion effect (E11) | margin-enhancing innovations (D43) |
| technological spillovers (O33) | innovation incentives (O31) |