Entrepreneurial Innovations, Competition and Competition Policy
Pehr-Johan Norbäck () and
Authors registered in the RePEc Author Service: Jonas Vlachos ()
No 670, Working Paper Series from Research Institute of Industrial Economics
We show that, in the case when innovations are for sale, increased product market competition, captured by reduced product market profits, can increase the incentives for innovations. The reason is that the incentive to innovate depends on the acquisition price which, in turn, might increase despite firms in the market making lower profits. We also show that stricter, but not too strict, merger and cartel policies tend to increase the incentive for innovations for sale by ensuring the bidding competition for the innovation and by increasing the relative profitability of being the most efficient firm in the industry. Moreover, it is shown that increased intensity of competition can increase the relative profitability of innovation for sale, relative to innovation for entry.
Keywords: Acquisitions; Entrepreneurship; Innovation; Competition (search for similar items in EconPapers)
JEL-codes: G34 L13 L22 M13 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-ent, nep-fin, nep-ino and nep-mic
Date: 2006-09-22, Revised 2010-05-05
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Journal Article: Entrepreneurial innovations, competition and competition policy (2012)
Working Paper: Entrepreneurial Innovations, Competition and Competition Policy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0670
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