Working Paper No. 626

The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists, and Oligopolists

Published: September 2, 2004; revised June 11, 2007Pages: 41Keywords: Acquisitions; Entrepreneurship; Innovation; Venture Capital JEL-codes: G24; L10; L20; M13; O30

The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists, and Oligopolists Pehr-Johan Norbäck and Lars Persson

Exit of venture-backed firms often takes place through sales to incumbents. We show that in such an environment, venture-backed firms have stronger incentive to develop basic innovations into commercialized innovations than incumbents, due to strategic product market effects on the sales price of the venture-backed firm. This will increase the price for basic innovations, thereby triggering more innovations by entrepreneurs. Consequently, a venture capital market implies that more innovations are created, and that these become better developed. Moreover, we show that to exist in equilibrium, venture capitalists must be more efficient, otherwise incumbents will preempt venture capitalists entering the market by acquiring basic innovations.  

Pehr-Johan Norbäck


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Lars Persson


Ph: +46 8 665 4504

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?


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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.

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