Killer Acquisitions and Beyond: Policy Effects on Innovation Strategies

Igor Letina, Armin Schmutzler and Regina Seibel

No 15167, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper provides a theory of strategic innovation project choice by incumbents and start-ups which serves as a foundation for the analysis of acquisition policy. We show that prohibiting acquisitions has a weakly negative innovation effect. We provide conditions determining the size of the effect and, in particular, conditions under which it is zero. We further analyze the effects of less restrictive policies, including merger remedies and the tax treatment of acquisitions and initial public offerings. Such interventions tend to prevent acquisitions only if the entrant has sufficiently high stand-alone profits.

Keywords: Innovation; Killer acquisitions; Merger policy; Potential competition; Start-ups (search for similar items in EconPapers)
JEL-codes: G34 L41 O31 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-com and nep-ino
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: KILLER ACQUISITIONS AND BEYOND: POLICY EFFECTS ON INNOVATION STRATEGIES (2024)
Working Paper: Killer acquisitions and beyond: policy effects on innovation strategies (2023)
Working Paper: Killer Acquisitions and Beyond: Policy Effects on Innovation Strategies (2021)
Working Paper: Killer Aquisitions and Beyond: Policy Effects on Innovation Strategies (2021)
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