Acquisitions, entry, and innovation in oligopolistic network industries

Pehr Johan Norbäck, Lars Persson, Joacim Tåg*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

12 Citations (Scopus)

Abstract

In industries with network effects, incumbents' installed bases create barriers to entry that discourage entrepreneurs from developing new innovations. Yet, entry is not the only commercialization route for entrepreneurs. We show that the option of selling to an incumbent increases the innovation incentives for entrepreneurs when the network effects are strong and incumbents compete to preemptively acquire innovations. Thus, we establish that network effects and installed bases do not necessarily restrict the innovation incentives and that network effects promote acquisitions over entry.

Original languageEnglish
Peer-reviewed scientific journalInternational Journal of Industrial Organization
Volume37
Issue number1
Pages (from-to)1-12
Number of pages12
ISSN0167-7187
DOIs
Publication statusPublished - 11.2014
Externally publishedYes
MoE publication typeA1 Journal article - refereed

Keywords

  • Acquisitions
  • Entry
  • Innovation
  • Network effects
  • R&D

Fingerprint

Dive into the research topics of 'Acquisitions, entry, and innovation in oligopolistic network industries'. Together they form a unique fingerprint.

Cite this