European Business Schools Librarian's Group
IESE Research Papers,
IESE Business School
No D/1140: Cross-ownership, R&D Spillovers, and Antitrust Policy
Ángel L. López and Xavier Vives ()
Additional contact information
Ángel L. López: Universitat Autónoma de Barcelona, Postal: Plaza Cívica, s/n, 08193 Bellaterra, Barcelona
Xavier Vives: IESE Business School, Postal: IESE Business School. Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Abstract: This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with minority shareholdings. We fi…nd that, with high market concentration and sufficiently convex demand, there is no scope for cross-ownership to improve welfare regardless of spillover levels. Otherwise, there is scope for cross-ownership provided that spillovers are sufficiently large. The socially optimal degree of cross-ownership increases with the number of …firms, with the elasticity of demand and of the innovation function, and with the extent of spillover effects. In terms of consumer surplus standard, the scope for cross-ownership is greatly reduced even under low market concentration.
Keywords: competition policy; partial merger; collusion; innovation; minority shareholdings
23 pages, May 31, 2016
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WP-1140-E.pdf
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