2014

Acquisitions, Entry, and Innovation in Oligopolistic Network Industries

Reprint No. 2014:54

Author(s): Pehr-Johan Norbäck, Lars Persson and Joacim TågYear: 2014 Title: International Journal of Industrial Organization Volume (No.): 37 (November) Pages: 1–12
Online article (restrictions may apply)

In industries with network effects, incumbents' installed bases create barriers to entry that discourage entrepreneurs fromdeveloping newinnovations. Yet, entry is not the only commercialization route for entrepreneurs.We show that the option of selling to an incumbent increases the innovation incentives for entrepreneurs when the network effects are strong and incumbents compete to preemptively acquire innovations. Thus,we establish that network effects and installed bases do not necessarily restrict the innovation incentives and that network effects promote acquisitions over entry.

Reference:
Norbäck, Pehr-Johan, Lars Persson and Joacim Tåg (2014), "Acquisitions, Entry, and Innovation in Oligopolistic Network Industries". International Journal of Industrial Organization 37(November), 1–12.

Pehr-Johan Norbäck

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Lars Persson

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lars.persson@ifn.se

Joacim Tåg

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Ph: +46 8 665 4524
joacim.tag@ifn.se

Interdisciplinary European Studies

The European Union and the Return of the Nation State

9783030350048_200x_the-european-union-and-the-return-of-the-nation-state.jpg

This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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