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Merger Policy and Innovation: Must Enforcement Change to Account for Technological Change?

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  • Economics

Abstract

Merger Policy and Innovation: Must Enforcement Change to Account for Technological Change? This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Innovation Policy and the Economy, Volume 5 Volume Author/Editor: Adam B. Jaffe, Josh Lerner and Scott Stern, editors Volume Publisher: The MIT Press Volume ISBN: 0-262-10109-2 Volume URL: http://www.nber.org/books/jaff05-1 Conference Date: April 13, 2004 Publication Date: January 2005 Title: Merger Policy and Innovation: Must Enforcement Change to Account for Technological Change? Author: Michael L. Katz , Howard A. Shelanski URL: http://www.nber.org/chapters/c10809 5 Merger Policy and Innovation: Must Enforcement Change to Account for Technological Change? Michael L. Katz, University of California at Berkeley Howard A. Shelanski, University of California at Berkeley Executive Summary Merger policy is the most active area of U.S. antitrust policy. It is now widely believed that merger policy must move beyond its traditional focus on static ef- ficiency to account for innovation and address dynamic efficiency. Innovation cart fundamentally affect merger analysis in two ways. First, innovation can dramatically affect the relationship between the pre-merger marketplace and what is likely to happen if a proposed merger is consummated. Thus, irinova- tion can fundamentally influence the appropriate analysis for addressing tradi- tional, static efficiency concerns. Second, innovation can itself be an important dimension of market performance that is potentially affected by a merger. We explore how merger policy is meeting the challenges posed by innovation. I. Introduction Merger policy is the most active area of U.S. antitrust policy. From 1991 to 2002, for example, the Antitrust Division of the U.S. Depart- ment of Justice conducted an average of 161 merger investigations each year, which is more than all of the division's other civil and crimi- nal investigatio

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