Mergers, Innovation, and Inequality

CORE Discussion Paper No. 2004/6

18 Pages Posted: 28 Feb 2007

See all articles by Guido Cozzi

Guido Cozzi

Università degli Studi di Macerata - Department of Economics

Ornella Tarola

University of Lugano - Institute of Economic Research

Date Written: February 2003

Abstract

This paper presents a standard endogenous growth framework in which the source of growth is represented by vertical innovation. The crucial assumption we introduce is that there is a positive information gap concerning the discovery of innovation. The aim of reducing the information dissemination lag provides incentives for firms to decide to merge their research efforts. At the same time we find that the skilled/unskilled wage gap is strongly related to this phenomenon. We prove that changing antitrust attitudes toward efficienc-motivated mergers in contestable industries may simultaneously explain observed changes in the industry structure, in qualitative innovation, in wage inequality, and in labor supply composition.

Keywords: Growth, Firm-Size, Innovation Process, Antitrust Policy

JEL Classification: L25, L40, O31

Suggested Citation

Cozzi, Guido and Tarola, Ornella, Mergers, Innovation, and Inequality (February 2003). CORE Discussion Paper No. 2004/6, Available at SSRN: https://ssrn.com/abstract=965687 or http://dx.doi.org/10.2139/ssrn.965687

Guido Cozzi (Contact Author)

Università degli Studi di Macerata - Department of Economics ( email )

Via Crescimbeni 20
Macerata 62100
Italy

Ornella Tarola

University of Lugano - Institute of Economic Research ( email )

CH-6900 Lugano
Switzerland
+41919124661 (Phone)
+41919124662 (Fax)