Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81160
Authors: 
Norbäck, Pehr-Johan
Persson, Lars
Year of Publication: 
2006
Series/Report no.: 
IFN Working Paper 670
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.
Subjects: 
Acquisitions
Entrepreneurship
Innovation
Competition
JEL: 
G34
L13
L22
M13
O31
Document Type: 
Working Paper

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