Cross-Ownership, R&D Spillovers, and Antitrust Policy

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Cross-ownership, R&D Spillovers, and Antitrust Policy Abstract This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with minority shareholdings. We find that, with high market concentration and sufficiently convex demand, there is no scope for cross-ownership to improve welfare regardless of spillover levels. Otherwise, there is scope for cross-ownership provided that spillovers are sufficiently large. The socially optimal degree of cross-ownership increases with the number of firms, with the elasticity of demand and of the innovation function, and with the extent of spillover effects. In terms of consumer surplus standard, the scope for cross-ownership is greatly reduced even under low market concentration. Terms of use: Documents in EconStor mayJEL-Codes: D430, L130, O320.

Common-Ownership Concentration and Corporate Conduct

“…Researchers should also keep in mind that the above model doesn't allow for an endogenous choice of cost parameters. López & Vives (2016) show that common ownership can mitigate firms' well-known disincentives to innovate that can arise from technological spillovers. Under restrictive conditions, common ownership can even increase cost-reducing innovation to an extent that increases output and welfare.…”

“…More generally, understanding the endogeneity of ownership structures of competitors is a very interesting theoretical question for future research. López & Vives (2016) characterize socially optimal levels of common ownership amid the potential for technological spillovers, but it is not known under which conditions a decentralized equilibrium would implement the socially optimal allocation.…”

Conglomerate Mergers and Entry in Innovative Industries

“…Few recent works have emphasized the possibility that conglomerate mergers can generate anti-competitive concerns, including Denicolò (2000), Choi (2008), Alvisi et al (2011) and Masson et al (2014), but none of them focuses on the innovation channel, which is crucial here. The work is also strictly related to recent theories of merger analysis with endogenous innovation (Lopez and Vives, 2016;Motta and Tarantino, 2017;Federico et al, 2017a,b;Denicolò and Polo, 2017;Parra, 2017, 2018), but all of them focus on horizontal mergers between producers of substitutes, while this work is focused on mergers between complements. Finally, part of this work is related to theories of anticompetitive tying, some of which have analyzed when a merger with bundling of complementary goods can soften or tighten competition (see Matutes and Regibeau, 1992, for a classic analysis in a di¤erent framework).…”

A simple model of mergers and innovation

“…Several papers consider the relationship between some measure of competition and innovation (e.g., Aghion et al (2001), Aghion et al (2005), Vives (2008), Lopez and Vives (2016)), sometimes finding an "inverted-U" relationship. These papers, however, do not explicitly consider the case of horizontal mergers.…”

“…It then provides some insight on the likely net effect of a merger on innovation (and consumer welfare). The model considers the case of stochastic product innovation (as opposed to process innovation, which has been more extensively considered in the literature; see, e.g., Vives (2008) and Lopez and Vives (2016)). …”