Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/220034 
Year of Publication: 
2019
Series/Report no.: 
Tinbergen Institute Discussion Paper No. TI 2019-085/VII
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
This paper studies mergers in markets where firms invest in a portfolio of research projects of different profitability and social value. The portfolio nature of the investment problem brings about novel insights on the external effects of firms’ investments. The investment of a firm in one project imposes a negative business-stealing externality on the rival firms because it lowers the probability they win the innovation contest for that project; however, the investment of a firm in one project also exerts a positive business-giving externality on the rival firms because it increases the likelihood they win the contest for the alternative project.
Subjects: 
innovation portfolios
R&D contests
mergers
JEL: 
O32
L13
L22
O31
Document Type: 
Working Paper

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