Creative Destruction and Productive Preemption

Pehr-Johan Norbäck, Lars Persson and Roger Svensson

No 4075, CESifo Working Paper Series from CESifo

Abstract: We develop a theory of innovation for entry and sale into oligopoly, and show that inventions of higher quality are more likely to be sold (or licensed) to an incumbent due to strategic product market effects on the sales price. Such 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 data on patents granted to small firms and individuals, we find evidence that high-quality inventions are sold under preemptive bidding competition. Asymmetric information problems are shown to be solved by verification through entry for sale.

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)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp4075.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Unavailable

Related works:
Working Paper: Creative Destruction and Productive Preemption (2014)
Working Paper: Creative Destruction and Productive Preemption (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4075

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().