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| Arijit Mukherjee and Prabal Roy chowdhury |
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| ''Innovation and social desirability of merger'' |
| ( 2013, Vol. 33 No.1 ) |
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| Although regulatory authorities are putting more emphasis to the long-run effects of mergers and acquisitions due to their effects on innovation, several merger proposals have been challenged due to their adverse innovation effects. In a simple model with endogenous R&D investment, we show that the effects of merger on the R&D investment, consumer surplus and social welfare depend on the degree of knowledge spillover and the slope of the marginal cost of doing R&D. Hence, the social desirability of merger may depend on the effectiveness of the patent system and the cost of innovation. |
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| Keywords: Innovation; Merger; Welfare |
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
O3 - Technological Change; Research and Development: General |
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| Manuscript Received : Jun 27 2012 | | Manuscript Accepted : Feb 15 2013 |
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