Working paper

Mergers and Investments: Where Do We Stand?

Yassine Lefouili, and Leonardo Madio

Abstract

In 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.

Keywords

Competition; Investments; Innovation; Mergers, Entry;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L13: Oligopoly and Other Imperfect Markets
  • L40: General

Reference

Yassine Lefouili, and Leonardo Madio, Mergers and Investments: Where Do We Stand?, TSE Working Paper, n. 25-1617, February 2025, revised July 2025.

See also

Published in

TSE Working Paper, n. 25-1617, February 2025, revised July 2025