Mergers in Innovation Competition : A contest framework with knowledge spillovers

Claus van der Velden analyses various strategic aspects of mergers by applying microeconomic models of patent contests. He draws attention to the effects of mergers on the willingness to invest in R&D and on innovation profitability and shows that the organization of the R&D activities after a merger has a significant impact on the transactions profitability. The study also considers the consequences of knowledge spillovers in innovation processes for R&D costs and thus for a mergers outcome.