Can Foreclosure Benefit Consumers? The Case of Innovation in New Markets

17 September 2021
Dr. Alexandre Carbonnel

In an article published in Economics Bulletin, Associate Director Dr. Alexandre Carbonnel discusses the assessment of the effects of non-horizontal mergers on innovation when firms compete to  innovate in new markets. He shows that foreclosure may, in some cases, benefit consumers by giving them access to an innovation that would not be available in the absence of the merger. Dr. Carbonnel also determines the conditions under which foreclosure may increase consumer surplus. He argues that, since the impact of non-horizontal mergers on innovation is a priori ambiguous,  competition authorities should adopt a cautious approach.