Horizontal Mergers and Innovation with Knowledge Spillovers
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CC-BY-4.0
Abstract
Abstract We introduce knowledge spillovers in a model of innovation competition à la Federico et al. (2017) and Denicolò and Polo (2018), which otherwise features horizontal mergers that harm innovation due to the business stealing effect. With knowledge spillovers, competition discourages investment in R&D due to free-riding, and by internalizing such externalities, a merger can improve the incentives for innovation. Horizontal mergers raise (reduce) innovation if the spillover effect is large (small), in contrast with the standard account of spillover effects on mergers. JEL codes: G34, L13, L40, O30
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- europepmc
- last seen: 2026-05-19T01:45:01.086888+00:00
- unpaywall
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License: CC-BY-4.0