EconPapers    
Economics at your fingertips  
 

Acquisition-induced kill zone

Christopher Teh (), Dyuti Banerjee () and Chengsi Wang
Additional contact information
Christopher Teh: UNSW Sydney
Dyuti Banerjee: Department of Economics, Monash University

No 2022-24, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: We study the impact of a dominant incumbent’s acquisition on entry and R&D incentives in a model with multiple start-ups. The incumbent’s acquisition directly suppresses entry and can distort the non-target start-up’s R&D incentives by creating a kill zone. The reduced threat of entry can also cause the incumbent to shelve the acquired technology. Despite these negative effects, acquisitions generally affect consumer welfare ambiguously due to synergy benefits. We study the design of merger policies aimed at minimizing acquisition-related harms. We also show that entry-for-buyout may not be a valid defense for start-up acquisitions when accounting for non-target start-ups.

Keywords: Acquisitions; Innovation; Start-ups; Merger Policy; Remedies (search for similar items in EconPapers)
JEL-codes: G34 L12 L41 O31 (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-com, nep-ent, nep-ind, nep-ino, nep-mic, nep-reg and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://monash-econ-wps.s3-ap-southeast-2.amazonaws ... s/moswps/2022-24.pdf (application/pdf)

Related works:
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:mos:moswps:2022-24

Ordering information: This working paper can be ordered from
https://www.monash.e ... esearch/publications

Access Statistics for this paper

More papers in Monash Economics Working Papers from Monash University, Department of Economics Department of Economics, Monash University, Victoria 3800, Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Simon Angus ().

 
Page updated 2024-04-15
Handle: RePEc:mos:moswps:2022-24