Speaker:
Yassine Lefoulli
- Toulouse School of Economics
Thursday, February 22, 2024
at
12:00 PM
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, and find that the comparison between the innovation diversion ratio and the price diversion ratio can help competition authorities distinguish mergers that harm innovation from those that foster innovation.
