Mergers and Demand-Enhancing Innovation

CANCELLED (due to cancelled flight)

On May 16th Yassine Lefouili from the Toulouse School of Economics will give a seminar on Mergers and Demand-Enhancing Innovation. This is a joint seminar of the Centre for Business Economics (NHH) and BECCLE. 


We study the impact of horizontal mergers on merging firms’ incentives to invest in demand-enhancing innovation. In our baseline model, we identify four effects of a symmetric merger on these incentives: the innovation diversion effect, the margin expansion effect, the demand expansion effect, and the per unit return to innovation effect. We offer sufficient conditions for a merger to reduce or raise merging firms’ incentives to innovate in the absence of spillovers and efficiency gains in R&D, and find that a comparison between the innovation diversion and price diversion ratios is informative about the impact of a merger on innovation.


The seminar will take place on the 16th of May from 12.15 to 13.30 pm at the Department of Economics at NHH, room E209/210.