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Horizontal mergers and dynamic competition

December 2010

Economic Focus

Dynamic competition stimulates firms to find ways to invent new or better products and/or to identify cost savings through better processes or technologies. It lies at the heart of the technological and economical progress and has more long-run effects than static competition, which mainly focuses on prices. Merger may affect dynamic competition by changing firms’ willingness to innovate and/or by increasing the capacities of the merging parties to innovate.

The present article discusses possible merger effects on dynamic competition and answers the question whether and how they are considered in the existing European merger regulation.    

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