Startup acquisitions and merger policy

Christopher Teh () and Chengsi Wang ()
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Christopher Teh: Toulouse School of Economics, 31000 Toulouse, France & School of Economics,
Chengsi Wang: Department of Economics and Monash Digital Lab, Monash University

No 2025-15, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This article critically examines recent economic theories on the relationship between startup acquisitions and innovation. We argue that the prevalence of killer acquisitions is likely overstated, even from a purely theoretical perspective. We further show that the entry-for-buyout effect may not always hold: relaxing merger control does not necessarily lead startups to invest more or pursue more disruptive innovation. Effective merger policy must adopt a dynamic perspective, balancing short-term competitive harms against long-terminnovation benefits. The article concludes with practical policy recommendations for the design and enforcement of merger control.

Keywords: acquisition; innovation; merger policy; startup (search for similar items in EconPapers)
JEL-codes: G34 L12 L41 O3 (search for similar items in EconPapers)
Date: 2025-11
New Economics Papers: this item is included in nep-com, nep-ent, nep-ind, nep-mic, nep-reg and nep-sbm
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