AbstractIn this paper, we review recent studies on the impact of mergers on investments. We begin by examining how mergers among competing incumbents influence firms’ incentives to develop new products and undertake cost-reducing or quality-enhancing investment. We then analyze how an incumbent’s acquisition of an innovative entrant affects the investment incentives of both parties. Next, we discuss the effects of vertical mergers on the investment decisions of both upstream and downstream firms. Finally, we highlight several policy-relevant insights from the literature and suggest directions for future research.
Mergers and Investments: Where Do We Stand?
Leonardo Madio
2026
Abstract
AbstractIn this paper, we review recent studies on the impact of mergers on investments. We begin by examining how mergers among competing incumbents influence firms’ incentives to develop new products and undertake cost-reducing or quality-enhancing investment. We then analyze how an incumbent’s acquisition of an innovative entrant affects the investment incentives of both parties. Next, we discuss the effects of vertical mergers on the investment decisions of both upstream and downstream firms. Finally, we highlight several policy-relevant insights from the literature and suggest directions for future research.
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