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Entrepreneurial Innovations, Competition and Competition Policy

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Author Info
Norbäck, Pehr-Johan () (Research Institute of Industrial Economics)
Persson, Lars () (Research Institute of Industrial Economics)
Vlachos, Jonas () (Research Institute of Industrial Economics)

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Abstract

We show that, in the case when innovations are for sale, increased product market competition, captured by reduced product market profits, can increase the incentives for innovations. The reason is that the incentive to innovate depends on the acquisition price which, in turn, might increase despite firms in the market making lower profits. We also show that stricter, but not too strict, merger and cartel policies tend to increase the incentive for innovations for sale by ensuring the bidding competition for the innovation and by increasing the relative profitability of being the most efficient firm in the industry. Moreover, it is shown that increased intensity of competition can increase the relative profitability of innovation for sale, relative to innovation for entry.

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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 670.

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Length: 47 pages
Date of creation: 22 Sep 2006
Date of revision:
Handle: RePEc:hhs:iuiwop:0670

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Related research
Keywords: Acquisitions Entrepreneurship Innovation Competition

Other versions of this item:

Find related papers by JEL classification:
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
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ganslandt, Mattias & Persson, Lars & Vasconcelos, Helder, 2007. "Asymmetric Collusion and Merger Policy," Working Paper Series 719, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
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