Merger simulations with observed diversion ratios

One approach to merger simulations used in antitrust cases is to calibrate demand from market shares and a few additional parameters. When the products involved in the merger case are differentiated along several dimensions, actual diversion ratios may be very different from those calculated from market shares. This again may affect the predicted post-merger price effects. This article shows how merger simulation can be performed using observed diversion ratios. To illustrate the potential effects of this approach we use diversion ratios from a local grocery market in Norway. In this case diversions from the acquired to the acquiring stores were considerably smaller than suggested by market shares, and the predicted average price increase from the acquisition was 40% lower using this model rather than a model based upon market shares. This analysis also suggests that even a subset of observed diversion ratios may significantly change the prediction from a merger simulation based upon market shares.     

Business model–dynamic capabilities and open innovation initiatives in research-intensive organisations: A case of Australia's national science agency

Publicly funded national science agencies create value as innovation catalysts and through their scientific and research missions, they tackle wicked problems. Understanding how dynamic capabilities and business model innovation enable research-intensive organisations to seize the market in the mission is key to translating bold new science that has impact. We qualitatively explore how Australia's national science agency—the Commonwealth Scientific Industrial Research Organisation (CSIRO)—has pursued open innovation to support business model–dynamic capabilities in an evolving publicly funded landscape. We reflect on the value of open innovation initiatives that have allowed the CSIRO to ambidextrously pursue world-class science while achieving impact.

Points for practitioners

• Dynamic capabilities and business model innovation are strategic tools for publicly funded national science agencies seeking to seize the market in the mission.
• We examine a case of business model–dynamic capabilities in CSIRO.
• Open innovation has been important for CSIRO as part of an ambidextrous approach.