Acquihiring for Monopsony Power

Heski Bar-Isaac, Justin Johnson and Volker Nocke

No 18573, CEPR Discussion Papers from Centre for Economic Policy Research

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.

JEL-codes: J42 L13 M12 (search for similar items in EconPapers)
Date: 2023-11
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Journal Article: Acquihiring for Monopsony Power (2025)
Working Paper: Acquihiring for Monopsony Power (2024)
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