2019

A Theory of Gazelle Growth: Competition, Venture Capital Finance and Policy

Reprint No. 2019:55

Author(s): Mehmet Caglar Kaya and Lars PerssonYear: 2019 Title: North American Journal of Economics and Finance Volume (No.): 50 (November)
Online article (restrictions may apply)
Preliminary version


This paper proposes a theory of gazelle growth in which gazelles can grow either organically or through acquisitions. The model includes three types of firms: incumbent, target, and gazelle. We show that the lower cost of organic growth can increase the incentives for acquisition growth because the incumbent understands that if it acquires the target firm, the gazelle will then invest organically in order to grow, and therefore, the acquisition will not be enough to protect the incumbent’s market power. The gazelle could then acquire the target firm at a good price. We also show that financial support for the organic growth of gazelles can increase gazelles’ growth through acquisitions because incumbents’ preemptive motives are reduced.


Reference:
Caglar Kaya, Mehmet and Lars Persson (2019), "A Theory of Gazelle Growth: Competition, Venture Capital Finance and Policy". North American Journal of Economics and Finance 50(November), .

Lars Persson

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Mehmet Caglar Kaya

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Mob: +46 73 870 7327
mehmet_caglar.kaya@ne...

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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