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The Great Start-up Sellout and the Rise of Oligopoly

Author

Listed:
  • Florian Ederer
  • Bruno Pellegrino

Abstract

We document a secular shift from initial public offerings to acquisitions of venture capital-backed start-ups and show that this trend is accompanied by an increase in the opportunity cost of going public over the last quarter-century. Dominant companies that are disproportionately active in the corporate control market for start-ups have become more insulated from the pressures of product market competition over the same period. These facts are consistent with the hypothesis that start-up acquisitions have contributed to rising oligopoly power.

Suggested Citation

  • Florian Ederer & Bruno Pellegrino, 2023. "The Great Start-up Sellout and the Rise of Oligopoly," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 274-278, May.
    • Handle: RePEc:aea:apandp:v:113:y:2023:p:274-78
    DOI: 10.1257/pandp.20231024
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    File URL: https://doi.org/10.3886/E189781V1
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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