Impact of Horizontal Mergers on Research & Development and Patenting: Evidence from Merger Challenges in the U.S. |
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Authors: | Walter G Park Ralph Sonenshine |
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Institution: | (1) Department of Economics, American University, 4400 Massachusetts Ave. NW, Washington, DC, USA |
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Abstract: | This paper contributes further empirical evidence on the effects of mergers on innovation using company level data. Evidence
on this issue has implications for the relationship between innovation and market concentration. Our departure from previous
work is that we focus on a sample of horizontal mergers whose market concentration impacts were flagged by U.S. antitrust
authorities as potentially posing a problem for antitrust law compliance. We employ propensity score matching and difference-in-differences
estimation to compare the innovation activities of challenged and non-challenged merger firms to a control group of non-merged
firms. We use R&D, patent grants, and citation-weighted patent grants to measure the innovation activities of firms before
and after a merger. Our results indicate that the post-merger innovation outcomes of firms whose mergers were challenged are
lower than they would have been had the firms not merged. But for non-challenged mergers, or mergers that do not raise concerns
about market concentration, post-merger innovation outcomes are not significantly different from what they would have been
without a merger. |
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Keywords: | |
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