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Mergers, innovation, and inequality

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  • COZZI, Guido
  • TAROLA, Ornella

Abstract

This paper presents a standard endogenous growth framework in which the source of growth is represented by vertical innovation. The crucial assumption we introduce is that there is a positive information gap concerning the discovery of innovation. The aim of reducing the information dissemination lag provides incentives for firms to decide to merge their research efforts. At the same time we find that the skilled/unskilled wage gap is strongly related to this phenomenon. We prove that changing antitrust attitudes toward efficienc-motivated mergers in contestable industries may simultaneously explain observed changes in the industry structure, in qualitative innovation, in wage inequality, and in labor supply composition.

Suggested Citation

  • COZZI, Guido & TAROLA, Ornella, 2004. "Mergers, innovation, and inequality," LIDAM Discussion Papers CORE 2004006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2004006
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    References listed on IDEAS

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    More about this item

    Keywords

    growth; firm-size; innovation process; antitrust policy;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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