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)


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
Issue number1
Pages (from-to)1-12
Number of pages12
Publication statusPublished - 11.2014
MoE publication typeA1 Journal article - refereed


  • 512 Business and Management
  • Acquisitions
  • Entry
  • Innovation
  • Network effects
  • R&D


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