Acquisitions, Entry and Innovation in Oligopolistic Network Industries

Pehr-Johan Norbäck, Lars Persson and Joacim Tåg

No 867, Working Paper Series from Research Institute of Industrial Economics

Abstract: In industries with network effects, incumbents’ installed bases create barriers to entry that discourage entrepreneurs from developing new innovations. Yet, entry is not the only commercialization route for entrepreneurs. We show that the op- tion of selling to an incumbent increases the innovation incentives for entrepreneurs when the network effects are strong and incumbents compete to preemptively ac- quire innovations. Thus, we establish that network effects and installed bases do not necessarily restrict the innovation incentives, and that network effects promote acquisitions over entry.

Keywords: Acquisitions; Entry; Network effects; Innovation; R&D (search for similar items in EconPapers)
JEL-codes: L10 L15 L26 L50 L86 O31 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2011-04-06, Revised 2016-11-30
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-ent, nep-ino, nep-ipr, nep-pr~, nep-net, nep-reg, nep-tid and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Norbäck, Pehr-Johan, Lars Persson and Joacim Tåg, 'Acquisitions, Entry and Innovation in Network Industries' in International Journal of Industrial Organization, 2014, pages 1-12.

Downloads: (external link)
https://www.ifn.se/wfiles/wp/wp867.pdf (application/pdf)

Related works:
Journal Article: Acquisitions, entry, and innovation in oligopolistic network industries (2014)
Working Paper: Entrepreneurial Innovations in Network Industries (2008)
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:hhs:iuiwop:0867

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson ().