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Start-ups for sale!

2019-05 IFN Newsletter No. 1, 2019

Author(s): Pehr-Johan Norbäck, Lars Persson and Roger Svensson

Start-ups for sale! Pehr-Johan Norbäck, Lars Persson and Roger Svensson

When should entrepreneurs choose to enter the market with a start-up? And when should they sell their invention or business idea? New research on how entrepreneurs decide between entry and sale offers significant insights for policy makers concerned about economic welfare.

At first glance, the contribution of start-ups to economic welfare seems to be limited, since many are acquired before they can grow. However, if start-ups benefit from tough bidding competition when they are sold, this encourages them to develop high-quality business or R&D projects, increasing social welfare. The social benefits of such acquisitions depend on whether incumbents can identify high-quality start-ups. The asymmetric information problem can be resolved if inventors first enter the market with a start-up to signal high quality.

Online article (restrictions may apply)


Reference:

Norbäck, Pehr-Johan, Lars Persson and Roger Svensson (2019), "Start-ups for sale!". IFN Newsletter No. 1, 2019.

Pehr-Johan Norbäck

Contact

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

Lars Persson

Contact

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

Roger Svensson

Contact

Ph: +46 8 665 4549
Mob: +46 70 491 0166
roger.svensson@ifn.se

Interdisciplinary European Studies

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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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