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Acquihiring for Monopsony Power

Author

Listed:
  • Heski Bar-Isaac

  • Justin P. Johnson

  • Volker Nocke

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, 2024. "Acquihiring for Monopsony Power," CRC TR 224 Discussion Paper Series crctr224_2024_500, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2024_500
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    Cited by:

    1. Benkert, Jean-Michel & Letina, Igor & Liu, Shuo, 2025. "Startup acquisitions: Acquihires and talent hoarding," European Economic Review, Elsevier, vol. 178(C).
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    3. Yassine Lefouili & Leonardo Madio, 2025. "Mergers and Investments: Where Do We Stand?," Working Papers hal-05129593, HAL.
    4. Yassine Lefouili & Leonardo Madio, 2026. "Mergers and investments : where do we stand ?," Post-Print hal-05543677, HAL.

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    Keywords

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    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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