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Innovation and the merger paradox

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  • Miyagiwa, Kaz
  • Wan, Yunyun

Abstract

The merger paradox in Cournot oligopoly is revisited in the presence of R&D investment. Two cases are presented in which firms merge profitably without satisfying the 80-percent threshold requirement of Salant et al. (1983).

Suggested Citation

  • Miyagiwa, Kaz & Wan, Yunyun, 2016. "Innovation and the merger paradox," Economics Letters, Elsevier, vol. 147(C), pages 5-7.
    • Handle: RePEc:eee:ecolet:v:147:y:2016:i:c:p:5-7
    DOI: 10.1016/j.econlet.2016.08.005
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    References listed on IDEAS

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    1. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    2. Carl Davidson & Ben Ferrett, 2007. "Mergers in Multidimensional Competition," Economica, London School of Economics and Political Science, vol. 74(296), pages 695-712, November.
    3. Daughety, Andrew F, 1990. "Beneficial Concentration," American Economic Review, American Economic Association, vol. 80(5), pages 1231-1237, December.
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    Cited by:

    1. Lei Bao & Wenshi Yu, 2022. "Efficiency-Enhancing Horizontal Mergers in Spatial Competition with Network Externalities," Mathematics, MDPI, vol. 10(18), pages 1-13, September.
    2. Dusanee Kesavayuth & Sang-Ho Lee & Vasileios Zikos, 2018. "Merger and Innovation Incentives in a Differentiated Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 25(2), pages 207-221, May.

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    More about this item

    Keywords

    Merger paradox; R&D; Innovation; Cournot oligopoly;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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