SFB 303 Discussion Paper No. A - 139
Author: Zachau, Ulrich
Title: Mergers in the Model of an R+D-race
Abstract: In this paper I analyse a model of a patent race in which mergers increase the R+D-efficiency of the
merging firms. Mergers increase the R+D-effort and the profits of the merging firms and decrease those of the
outside firms. By increasing the aggregate R+D-effort in the industry, they shorten the time period needed for the
innovation. Typically, a merger of all firms does not maximise the profits of the merged firm per constituent
firm, which makes it possible to explain mergers other than those into monopoly. The model can also be
interpreted as a non-linear Cournot model; it can then be used as an explanation of mergers in a product market
that lower the marginal costs of the merging firms
Keywords:
JEL-Classification-Number:
Creation-Date: November 1987
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