Incorporating dynamic efficiency concerns in merger analysis: the use of innovation markets
Article Abstract:
Dynamic antitrust analysis that incorporates expected innovation over time in particular markets should be used to assess the effects of proposed mergers on efficiency and competition. The analysis focuses on three markets: the existing market for the product, the market for research and development and the market for products not yet developed. Anticompetitive behavior can stall innovations that would have resulted in lowered prices and improved products. Dynamic efficiency models should be used to capture the potentially harmful effects of reduced research and innovation.
Publication Name: Antitrust Law Journal
Subject: Law
ISSN: 0003-6056
Year: 1995
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The use of innovation markets: a reply to Hay, Rapp, and Hoerner
Article Abstract:
The innovation market approach to merger analysis proposed by the Dept of Justice and the Federal Trade Commission fills in gaps in traditional antitrust merger analysis and has bases in theory, empirical evidence and statute. The link between concentration and reduced innovation is not airtight, but mergers can reduce and have reduced innovation when research and development departments are combined. Innovation markets are not incompatible with section 7 of the Clayton Act because reduced innovation could be found to lead to lower output and higher prices.
Publication Name: Antitrust Law Journal
Subject: Law
ISSN: 0003-6056
Year: 1995
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The misapplication of the innovation market approach to merger analysis
Article Abstract:
The innovation market approach that has been integrated into the merger analysis of the Dept of Justice and the Federal Trade Commission is based on questionable assumptions and may harm consumer welfare and undermine the integrity of the merger guidelines. The innovation market approach assesses the potential impact of a merger on innovation by assessing research and development expenditures. Research and development is not an ideal predictor of innovation, and links between innovation and consumer welfare should be more clearly established.
Publication Name: Antitrust Law Journal
Subject: Law
ISSN: 0003-6056
Year: 1995
User Contributions:
Comment about this article or add new information about this topic:
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