Bundling or breaking apart? Mixed mergers, innovation effort, and pricing power in logistics systems

Logistics systems are increasingly organised around complementary services and platform-based bundles. In this setting, mixed mergers between firms in related logistics segments have become a key strategic option, yet their implications for innovation and pricing remain unclear. This study develops a game-theoretic model of two complementary logistics firms that choose R&D effort, decide whether to form a mixed merger, and then compete under three configurations: no merger, a mixed merger with bundling, and a mixed merger without bundling. In a baseline with symmetric, commonly known R&D costs, the preferred structure depends on how strongly customers value service quality: bundling is attractive when quality sensitivity is low, while independent operation dominates when quality is central. An extension with privately known R&D costs and surplus sharing shows that bundled mixed mergers become a more robust source of profit, but shift innovation effort and pricing power towards the advantaged firm.