Imperial College London
Portrait Picture

ProfessorTommasoValletti

Business School

Professor of Economics
 
 
 
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Contact

 

+44 (0)20 7594 9215t.valletti Website CV

 
 
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Location

 

417City and Guilds BuildingSouth Kensington Campus

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Summary

 

Publications

Citation

BibTex format

@unpublished{Federico:2018:10.2139/ssrn.2999178,
author = {Federico, G and Langus, G and Valletti, TM},
doi = {10.2139/ssrn.2999178},
title = {Horizontal mergers and product innovation},
url = {http://dx.doi.org/10.2139/ssrn.2999178},
year = {2018}
}
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RIS format (EndNote, RefMan)

TY  - UNPB
AB  - We set up a stylized oligopoly model of uncertain product innovation to analyze the effects of a merger on innovation incentives and on consumer surplus. The model incorporates two competitive channels for merger effects: the "price coordination" channel and the internalization of the "innovation externality". We solve the model numerically and find that price coordination between the two products of the merged firm tends to stimulate innovation, while internalization of the innovation externality depresses it. The latter effect is stronger in our simulations and, as a result, the merger leads to lower innovation incentives for the merged entity, absent cost efficiencies and knowledge spillovers. In our numerical analysis both overall innovation and consumer welfare fall after a merger.
AU  - Federico,G
AU  - Langus,G
AU  - Valletti,TM
DO  - 10.2139/ssrn.2999178
PY  - 2018///
TI  - Horizontal mergers and product innovation
UR  - http://dx.doi.org/10.2139/ssrn.2999178
UR  - http://hdl.handle.net/10044/1/57833
ER  -
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