Acquihiring for Monopsony Power

Heski Bar-Isaac (), Justin P. Johnson () and Volker Nocke ()
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Heski Bar-Isaac: University of Toronto, Toronto, Ontario M5S 3E6, Canada
Justin P. Johnson: Cornell University, Ithaca, New York 14853
Volker Nocke: University of Mannheim, 68161 Mannheim, Germany

Management Science, 2025, vol. 71, issue 4, 3485-3496

Abstract: It is often argued that startups are acquired for the sole purpose of hiring specialized talent. We show that the goal of such acquihires might be to shut down the most relevant labor market competitor. This grants the acquirer monopsony power over specialized talent. As a consequence, acquihiring may harm employees and be socially inefficient. We explore the robustness of these effects, allowing for private benefits associated with working at a startup, varying bargaining protocols, multiple employees with and without complementarities, and private information.

Keywords: acquihiring; acquisitions; monopsony power; specialized labor markets; competition policy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:4:p:3485-3496

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