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Mergers and Innovation

Rockett, Katharine and Regibeau, Pierre (2019) 'Mergers and Innovation.' The Antitrust Bulletin, 64 (1). 31 - 53. ISSN 0003-603X

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Abstract

Do mergers raise substantial additional issues when the parties have significant innovation programs? To answer this, we examine the merger-related efficiencies that arise only with substantial innovation, arguing that innovation-intensive mergers should be treated more leniently than mergers without this dynamic dimension. We provide guidance on evidence that might determine the magnitude of such efficiencies. Next, we argue that where innovation is “directed” towards a product market, dealing with product line overlap should allay concerns about postmerger innovation. If research is not directed, we argue that theories of harm linked to the product market are unconvincing. Instead, one should look at theories of harms in the innovation market, which stem from the advantage in being first to innovate. Such first-mover advantages can be rooted in patent protection, switching costs, or network effects. This approach helps explain some of the remedies recently imposed on transactions such as Dow-Dupont and Bayer-Monsanto.

Item Type: Article
Uncontrolled Keywords: Merger, Innovation, Evidence, Policy Algorithm
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Elements
Date Deposited: 18 Dec 2018 14:03
Last Modified: 05 Sep 2019 17:15
URI: http://repository.essex.ac.uk/id/eprint/23644

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