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Working Paper 18-4 v3 (updated March 2019)

Mergers and Innovation: Evidence from the Hard Disk Drive Market

AUTHORS: Anna Rita Bennato, Stephen Davies, Franco Mariuzzo & Peter Ormosi

ABSTRACT: This case study is a relatively rare ex-post evaluation of how the level of innovation changed after the 5-to-3 consolidation of the world-wide hard disk drive (HDD) industry. We take a holistic view of innovation, employing four different measures: R&D expenditure and patent activity as indicators of innovative inputs, and the number of new products marketed, and their unit user costs as indicators of innovative output. This allows us to distinguish the magnitude of the merging parties' innovative efforts from the productivity of those efforts. Of the remaining HDD manufacturers, for Seagate we found an increase in all our innovation measures following the mergers, but for Western Digital the evidence is mixed. Methodologically, the paper draws light on some of the challenges of conducting similar case-specific retrospective studies on the impact of mergers on innovation.

CITATION: Bennato AR, Davies S, Mariuzzo F & Ormosi P (2018) "The effect of market consolidation on innovation in the HDD industry", CCP Working Paper 18-4

Working Paper 18-4 v2

Policy Brief 18-4

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