Recent merger decisions by competition authorities have revived the debate on the relationship between competition and innovation. This article reviews this issue by drawing on the relevant economic literature, and by placing it in the broader policy debate on the benefits of competitive...

We set up a stylized oligopoly model of uncertain product innovation to analyze the effects of a merger on innovation incentives and on consumer surplus. The model incorporates two competitive channels for merger effects: the "price coordination" channel and the internalization of the...