subsidiaries tend to be less active in patenting. There are a few subsidiaries that are R&D centers of the parent firm (e.g., Honda R&D is a 100%-owned R&D subsidiary of Honda Motor) in which case their inventions are usually assigned to the parent firm.

The purpose of this study is to compare the pre-merger level to the post-merger level. The pre-merger level is calculated as the average in the three years preceding the merger of R&D intensity (or the number of patents), to smooth away yearly fluctuations that can be large particularly as regards the number of patents. The post-merger level is the average of three years $ (T, T+1, T+2) $ following the merger (in accounting year T), of five years $ (T, T+1, T+2, T+3, T+4) $ , or of the three years beginning with the second year $ (T+2, T+3, T+4) $ to take account of the lag in the effect of integration.

#### 5.3. Results

The results are summarized in Table 6. When we took post-merger five years, the number of firms that increased R&D intensity after the merger was on a par with the one that decreased R&D intensity. However, when we took post-merger three years or three-to-five years, decreasing cases occupied the majority. Decreasing cases were even more dominant concerning the R&D output measure, that is, the number of patents. In short, there is no evidence suggesting that mergers increased R&D intensity or R&D efficiency as measured by the productivity of R&D to produce patents.

To inquire if this conclusion is robust, we made a few further analyses. First, we restricted the sample to R&D-intensive firms, which were defined as the firms with the R&D intensity being 3 percent or more, or 4 percent or more. The table suggests that, among these firms, the merger may have had an effect of intensifying R&D efforts, because the number of firms that increased R&D intensity is greater than that of firms decreasing R&D intensity. However, in terms of the number of patents, there were, again, more firms with decreases following the mergers. Therefore, the mergers do not appear to have increased R&D efficiency and in fact are more likely to have decreased it.

Second, we restricted the sample to those merger cases for which Japan Fair Trade Commission gave close scrutiny before giving approvals with or without remedies $ ^{13} $ . The number of cases is only 5 or 6 and, therefore, the result is difficult to be generalized. Among these, the table indicates that, like R&D-intensive firms, there are more firms with increases in R&D expenditure and yet there are more firms with decreases in the number of patents. That is, even if the mergers helped the firms to increase their efforts, there is no evidence suggesting that they increased R&D efficiency.

Third, as discussed in the previous subsection, it takes 18 months from patent application to its publication. Also, there may be a lag between R&D efforts and patent applications. To investigate if such a lag changes our result, we made similar comparisons incorporating a 2-year or 3-year lag. The table shows that, even with such lags taken into account, the number of firms whose patent applications decreased after the mergers outweighs that of firms with increasing patent applications.

These results together suggest that there is no evidence to support the argument that mergers intensify R&D efforts. To be true, among R&D-intensive firms and among big