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B.E. Journal of Economic Analysis & Policy

Acquisitions for Sleep

Scientific Article in English
Norbäck, Pehr-Johan, Charlotta Olofsson and Lars Persson (2020). “Acquisitions for Sleep”. B.E. Journal of Economic Analysis & Policy 20(2), 20190021.

Pehr-Johan Norbäck, Charlotta Olofsson, Lars Persson

Within the policy debate, there is a fear that large incumbent firms buy small firms’ inventions to ensure that they are not used in the market. We show that such “acquisitions for sleep” can occur if and only if the quality of a process invention is small; otherwise, the entry profit will be higher than the entry-deterring value. We then show that the incentive for acquiring for the purpose of putting a patent to sleep decreases when the intellectual property law is stricter because the profit for the entrant then increases more than the entry-deterring value does.

Pehr-Johan Norbäck

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