Horizontal Mergers and Product Quality

We analyze optimal merger policy in R&D-intensive industries with product innovation aiming to improve the quality of products. Our results suggest that a permissive merger policy is rarely optimal in high-tech industries when the antitrust authority considers a welfare standard that balances the impact of mergers on con-sumers' surplus and firms' profits. In particular, relative to a benchmark where the effects from R&D are absent, we show that the optimal merger policy should not be substantially more permissive in the presence of those effects from R&D. Keywords Merger policy • High-tech industries • Endogenous quality • Oligopoly JEL Classification L11 • L12 A previous version of this paper was circulated under the title "Competition for quality and optimal merger policy".

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Merger policy in innovative industries

González-Maestre

Granero

2016

Port Econ J

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Horizontal Mergers and Product Quality

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Merger policy in innovative industries

Merger policy in innovative industries

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