Creative Destruction and Productive Preemption

Pehr-Johan Norbäck, Lars Persson and Roger Svensson

No 799, Working Paper Series from Research Institute of Industrial Economics

Abstract: We develop a theory of commercialization mode (entry or sale) of entrepreneurial inventions into oligopoly, and show that an invention of higher quality is more likely to be sold (or licensed) to an incumbent due to strategic product market effects on the sales price. Moreover, preemptive acquisitions by incumbents are shown to stimulate the process of creative destruction by increasing the entrepreneurial effort allocated to high-quality invention projects. Using detailed data on patents granted to small firms and individuals, we find evidence that high-quality inventions are often sold, and that they are sold under bidding competition.

Keywords: Acquisitions; Entrepreneurship; Innovation; Start-ups; Patent; Ownership; Quality (search for similar items in EconPapers)
JEL-codes: G24 L10 L20 M13 O30 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2009-06-10, Revised 2014-09-12
New Economics Papers: this item is included in nep-com, nep-ent, nep-ino, nep-ipr, nep-pr~, nep-mic and nep-tid
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Creative Destruction and Productive Preemption (2013)
Working Paper: Creative Destruction and Productive Preemption (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0799

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