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Killer acquisitions and beyond: policy effects on innovation strategies

Igor Letina, Armin Schmutzler () and Regina Seibel

No 358, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: This paper provides a theory of strategic innovation project choice by incumbents and start-ups. We show that prohibiting killer acquisitions strictly reduces the variety of innovation projects. By contrast, we find that prohibiting other acquisitions only has a weakly negative innovation effect, and we provide conditions under which the effect is zero. Furthermore, for both killer and other acquisitions, we identify market conditions under which the innovation effect is small, so that prohibiting acquisitions to enhance competition would be justified.

Keywords: Innovation; killer acquisitions; merger policy; potential competition; start-ups (search for similar items in EconPapers)
JEL-codes: O31 L41 G34 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-com, nep-ino and nep-tid
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