predicts that a merger is more likely to be profitable in an innovation intensive industry. For a high degree of firm … heterogeneity, a merger reduces innovation of both the merged entity and non-merging competitors in an industry with high R … consistent with many predictions of the theoretical model. Our main result is that after a merger, patenting and R&D of the …

assumption were held, a positive external effect of a proposed merger would represent a sufficient condition to allow the merger … theory, moreover, demonstrates that privately unprofitable mergers can be the result of rational action. Therefore, we drop … this restrictive assumption and allow for unprofitable mergers to occur. This exerts a considerable impact on merger policy …

a reduction in welfare of 6.3%, while a merger between Vermillion and Novartis would result in a welfare loss of 1 …