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Journal of EconomicTheory
ISSN : 0022-0531

Entry and growth in a perfectly competitive vintage model


Peter Funk | Universitat zu Koln

Vol.138 No.1 , pp.211 ~ 236


In this paper, mergers are an equilibrium outcome in which acquirers “marry” targets so as to gain access to their organization capital. Firms with lower learning costs about the new technology are not necessarily those that manage it best once it is mature. Since there are gains from trade, a market for organization capital can arise through mergers. This model generates a merger wave after a shock to technology and is consistent with several other stylized facts on mergers documented in the literature. on by increasing the pool of R&D experiments from which the best technology is chosen. Technology trade increases the efficiency of invention while at the same time lowering the total number of inventors relative to the equilibrium without technology trade. Technology trade increases the volume of trade in goods. Technology trade increases product variety at the market equilibrium. Technology trade increases national income in each country and increases total gains from trade.


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