"On the role of input and output spillovers when R&D projects are risky"
JEL codes: L10, L40
Keywords: endogenous mergers, spatial competition
Abstract: Mergers for market power generally benefit outsider firms more than participating firms. Hence, outsiders should welcome such mergers between their competitors, but, frequently, this is not the case. Under spatial competition some outsiders gain more than the participating firms but others might benefit less. Thus, if the number of admissible mergers is limited, firms may decide to merge to preempt rival mergers. This paper studies the incentives for preemptive merger by firms engaged in spatial comeptition.