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Acquihiring for Monopsony Power

Author

Listed:
  • Heski Bar-Isaac

    (University of Toronto, Toronto, Ontario M5S 3E6, Canada)

  • Justin P. Johnson

    (Cornell University, Ithaca, New York 14853)

  • Volker Nocke

    (University of Mannheim, 68161 Mannheim, Germany)

Abstract

It is often argued that startups are acquired for the sole purpose of hiring specialized talent. We show that the goal of such acquihires might be to shut down the most relevant labor market competitor. This grants the acquirer monopsony power over specialized talent. As a consequence, acquihiring may harm employees and be socially inefficient. We explore the robustness of these effects, allowing for private benefits associated with working at a startup, varying bargaining protocols, multiple employees with and without complementarities, and private information.

Suggested Citation

  • Heski Bar-Isaac & Justin P. Johnson & Volker Nocke, 2025. "Acquihiring for Monopsony Power," Management Science, INFORMS, vol. 71(4), pages 3485-3496, April.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:4:p:3485-3496
    DOI: 10.1287/mnsc.2024.04604
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