Creative Destruction and Productive Preemptive Acquisitions

Reprint No. 2016:29

Author(s): Pehr-Johan Norbäck, Lars Persson and Roger SvenssonYear: 2016 Title: Journal of Business Venturing Volume (No.): 31 (3) Pages: 326–343
Online article (restrictions may apply)
Preliminary version

We develop a model of entrepreneurial innovation for entry and sale into oligopolies suitable for welfare analysis. We show that the expected consumer welfare can be higher under commercialization by sale than under commercialization by entry despite increased market power in the product market. The reason is that when the quality of the invention is sufficiently high, preemptive bidding competition among incumbents drives the acquisition price above the entry value. Entrepreneurs who sell their inventions will then have a stronger incentive to develop high-quality inventions than entrepreneurs who aim at entering the product market. Incumbents are hurt by this creative destruction process ignited by the entrepreneurs and thus have an incentive to undertake research to block entrepreneurs' research activities. We show that incumbents' own research effort can reduce, but not eliminate, the entrepreneurs' incentives to innovate for entry or sale.

Norbäck, Pehr-Johan, Lars Persson and Roger Svensson (2016), "Creative Destruction and Productive Preemptive Acquisitions". Journal of Business Venturing 31(3), 326–343.

Pehr-Johan Norbäck


Ph: +46 8 665 4522
Mob: +46 73 547 3379

Lars Persson


Ph: +46 8 665 4504

Roger Svensson


Ph: +46 8 665 4549
Mob: +46 70 491 0166

Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

Sick of Inequality.jpg

In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


Seminars organized by IFN


To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se