2006–2010

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

Reprint No. 2009:38

Author(s): Pehr-Johan Norbäck and Lars PerssonYear: 2009 Title: Journal of the European Economic Association Volume (No.): 7 (6) Pages: 1261–1290
Online article (restrictions may apply)


We construct a model where incumbents can either acquire basic innovations from entrepreneurs, or wait and acquire developed innovations from entrepreneurial firms supported by venture capitalists. We show that venture-backed entrepreneurial firms have an incentive to overinvest in development vis à vis incumbents due to strategic product market effects on the sales price of a developed innovation. This will trigger preemptive acquisitions by incumbents, thus increasing the reward for entrepreneurial innovations. We also show that venture capital can emerge in equilibrium if venture capitalists have cost advantages, or if development is associated with double moral hazard problems.


Reference:
Norbäck, Pehr-Johan and Lars Persson (2009), "The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists, and Oligopolists". Journal of the European Economic Association 7(6), 1261–1290.

Pehr-Johan Norbäck

Contact

Ph: +46 8 665 4522
Mob: +46 73 574 3379
pehr-johan.norback@if...

Lars Persson

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Ph: +46 8 665 4504
lars.persson@ifn.se

Interdisciplinary European Studies

Trust in the European Union in Challenging Times

2018-Trust-in-the-European-Union-by-Oxelheim.jpg

This is the first book in the Interdisciplinary European Studies collection. This volume provides an interdisciplinary perspective on trust in the EU from the vantage point of political science, law and economics. Lars Oxelheim, Lund University and affiliated to IFN, is one of the authors.

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

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