In many industries innovations play a crucial role for business success and competing firms spend large amounts of money on the development of new products. The dramatic concentration process which occurred in many industries in the last decade did not only affect the competition in product markets but also had an impact on innovation strategies.

Claus van der Velden analyses various strategic aspects of mergers by applying microeconomic models of patent contests. He draws attention to a specific but nonetheless important aspect of many real world mergers, namely the effects of mergers on the willingness to invest in R&D and on innovation profitability. He shows that the organization of the R&D activities after a merger has a significant impact on the transaction's profitability. The study also considers the consequences of knowledge spillovers in innovation processes for R&D costs and thus for a merger's outcome.

Autorentext
Dr. Claus van der Velden promovierte bei Prof. Dr. Peter-J. Jost am Lehrstuhl für Organisationstheorie der Wissenschaftlichen Hochschule für Unternehmensführung (WHU) in Vallendar. Er ist Senior Consultant bei Simon-Kucher & Partners in Bonn.

Inhalt
Content.- 1 Introduction.- 1.1 Background.- 1.2 Plan of Study.- I Knowledge Spillovers and Horizontal Mergers.- 2 Knowledge, Innovation and Spillovers.- 3 Horizontal Mergers.- II Innovation and Industry Structure.- 4 Previous Research.- 5 Contests with Spillovers.- III Merger in Oligopolistic Contests.- 6 Mergers in Contest Models.- 7 Post-Merger Organization of R&D.- 8 Mergers in Contests with Synergies.- 9 Conclusions and Remarks.- C Autonomous Budget Responsibility.- C.1 Total R&D Expenditures.- C.2 Profit Comparison.- D Centralized Budget Responsibility.- D.l Equilibrium R&D Expenditures.- D.2 Expenditure Comparison.- D.3 Profit Comparison.