Acquisitions, entry, and innovation in oligopolistic network industries
(2014) In International Journal of Industrial Organization 37(1). p.1-12- Abstract
In industries with network effects, incumbents' installed bases create barriers to entry that discourage entrepreneurs from developing new innovations. 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.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/b0b80a81-e0e9-4265-abbf-77584bb1424f
- author
- Norbäck, Pehr Johan ; Persson, Lars LU and Tåg, Joacim LU
- publishing date
- 2014-01-01
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Acquisitions, Entry, Innovation, Network effects, R&D, L10, L15, L26, L50, O31
- in
- International Journal of Industrial Organization
- volume
- 37
- issue
- 1
- pages
- 12 pages
- publisher
- Elsevier
- external identifiers
-
- scopus:84905372957
- ISSN
- 0167-7187
- DOI
- 10.1016/j.ijindorg.2014.07.003
- language
- English
- LU publication?
- no
- id
- b0b80a81-e0e9-4265-abbf-77584bb1424f
- date added to LUP
- 2020-01-23 15:54:54
- date last changed
- 2022-05-23 20:43:17
@article{b0b80a81-e0e9-4265-abbf-77584bb1424f, abstract = {{<p>In industries with network effects, incumbents' installed bases create barriers to entry that discourage entrepreneurs from developing new innovations. 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.</p>}}, author = {{Norbäck, Pehr Johan and Persson, Lars and Tåg, Joacim}}, issn = {{0167-7187}}, keywords = {{Acquisitions; Entry; Innovation; Network effects; R&D; L10; L15; L26; L50; O31}}, language = {{eng}}, month = {{01}}, number = {{1}}, pages = {{1--12}}, publisher = {{Elsevier}}, series = {{International Journal of Industrial Organization}}, title = {{Acquisitions, entry, and innovation in oligopolistic network industries}}, url = {{http://dx.doi.org/10.1016/j.ijindorg.2014.07.003}}, doi = {{10.1016/j.ijindorg.2014.07.003}}, volume = {{37}}, year = {{2014}}, }