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Startup acquisitions and innovation∗

Author

Listed:
  • Christopher Teh

    (Toulouse School of Economics, France & School of Economics)

  • Chengsi Wang

    (Department of Economics and Monash Digital Lab, Monash University)

Abstract

This survey explores how startup acquisitions influence innovation and competition. We review two key streams of literature: post-acquisition innovation, which examines whether incumbents develop or terminate acquired projects, and pre-acquisition innovation, which investigates how the prospect of acquisition shapes startups’ and incumbents’ incentives and innovation strategies. We also assess the implications for merger policy design, highlighting recent competition authority responses and dynamic considerations. Our work provides insights into the ongoing debate on how competition policy should regulate startup acquisitions in fast-evolving and uncertain markets.

Suggested Citation

  • Christopher Teh & Chengsi Wang, 2025. "Startup acquisitions and innovation∗," Monash Economics Working Papers 2025-14, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2025-14
    as

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    References listed on IDEAS

    as
    1. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
    2. Pauline Affeldt & Reinhold Kesler, 2021. "Competitors’ Reactions to Big Tech Acquisitions: Evidence from Mobile Apps," Discussion Papers of DIW Berlin 1987, DIW Berlin, German Institute for Economic Research.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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