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Repeated Innovations and Excessive Spin-Offs

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  • Mella-Barral, P.
  • Sabourian, H.

Abstract

Firms can voluntarily create independent firms to implement their technologically distant innovations and capture their value through capital markets. We argue that when firms repeatedly compete to make innovations, there is inefficient external implementation of innovations and "excessive" creation of such firms. This inefficiency is most exacerbated in the early stages of an industry, when the number of firms is still limited.

Suggested Citation

  • Mella-Barral, P. & Sabourian, H., 2023. "Repeated Innovations and Excessive Spin-Offs," Cambridge Working Papers in Economics 2347, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2347
    Note: pm10007, hs102
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    File URL: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2347.pdf
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    More about this item

    Keywords

    Repeated Innovations; Spin-Offs; Voluntary Firm Creation;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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