Working Paper No. 799

Creative Destruction and Productive Preemption

Published: June 10, 2009, revised September 2014Pages: 33Keywords: Acquisitions; Entrepreneurship; Innovation; Start-ups; Patent; Ownership; QualityJEL-codes: G24; L10; L20; M13; O30
Published version

Creative Destruction and Productive Preemption Pehr-Johan Norbäck, Lars Persson and Roger Svensson


We develop a theory of commercialization mode (entry or sale) of entrepreneurial inventions into oligopoly, and show that an invention of higher quality is more likely to be sold (or licensed) to an incumbent due to strategic product market effects on the sales price. Moreover, preemptive acquisitions by incumbents are shown to stimulate the process of creative destruction by increasing the entrepreneurial effort allocated to high-quality invention projects. Using detailed data on patents granted to small firms and individuals, we find evidence that high-quality inventions are often sold, and that they are sold under bidding competition.

Pehr-Johan Norbäck

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Ph: +46 8 665 4522
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pehr-johan.norback@if...

Lars Persson

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

Roger Svensson

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

Interdisciplinary European Studies

Trust in the European Union in Challenging Times

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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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