Growth through acquisition of innovations
Richard Dasher () and
Sergei Golovan ()
Additional contact information
Richard Dasher: Stanford University
Sergei Golovan: New Economic School
No w0247, Working Papers from New Economic School (NES)
The paper develops a model of growth driven by the acquisition of domestic firms by their peers, treating innovations endogenously. The model builds on microeconomic evidence concerning acquisitions in a technology economy, where the acquirers are innovative firms, which regard acquisitions as a complementary strategy to their R&D investments. The targets are small firms with leading positions on markets for their products. The acquirers are capable of further improving the products of their targets. The model includes the government, which collects corporate profit tax and redistributes it to provide subsidies for innovation and for acquisitions. We quantify the model using 1999-2013 financial data for Japanese firms, matched with patents obtained by the firms in that period. The estimates bear out the model's predictions of positive effect of acquisitions on economic growth. The impact of acquisitions on R&D intensity is negative under the substitutability between innovation and acquisition strategies. The effect of government subsidies to encourage acquisitions is linked to the parameters of the cost function and reflects the association between the cost of acquisitions and of R&D.
Keywords: innovation; endogenous growth; acquisition; social planner; patents (search for similar items in EconPapers)
JEL-codes: O11 O38 O40 O53 (search for similar items in EconPapers)
Pages: 61 pages
New Economics Papers: this item is included in nep-cse, nep-ino, nep-knm and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:abo:neswpt:w0247
Access Statistics for this paper
More papers in Working Papers from New Economic School (NES) Contact information at EDIRC.
Bibliographic data for series maintained by Vladimir Ivanyukhin ().