Conglomerate mergers revolutionize technology allocation, boosting market efficiency and profits.
The article explores how companies decide to invest in technology after merging in different markets. They use a game theory model to predict that merged firms will allocate technology to markets with better profit prospects. In a monopoly, technology is used to reduce costs in those markets. In an oligopoly, firms merge to transfer technology to more profitable markets or avoid competition. The size of markets and technological compatibility determine outcomes and merger decisions.