@article{972d2a845c26402eb50a38d4afe97009,
title = "Acquisitions, entry, and innovation in oligopolistic network industries",
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.",
keywords = "512 Business and Management, Acquisitions, Entry, Innovation, Network effects, R&D",
author = "Pehr-Johan Norb{\"a}ck and Lars Persson and Joacim T{\aa}g",
note = "Funding Information: We gratefully acknowledge the financial support from the NET Institute ( http://www.netinst.org )/the Kauffman Foundation ( #08-02 ), the Marianne and Marcus Wallenberg Foundation ( 2011.0023 ) and Tom Hedelius' and Jan Wallander's Research Foundation ( P2011-00661 ). This paper was written within the Gustaf Douglas Research Program on Entrepreneurship. We thank James Anton, Richard Gilbert, Michael Katz, Dina Nieman, Vasiliki Skreta, Lukas Wiewiorra, Juuso V{\"a}lim{\"a}ki, and the seminar participants at the FDPE IO Workshop at HECER (Helsinki), the NET Institute Conference at NYU/Stern (New York), and the 8th ZEW Conference: The Economics of ICT (Mannheim) and the ParisTech Telecom Economics Seminar Series (Paris) for the excellent comments and suggestions. An earlier version of this paper was distributed with the title “Entrepreneurial Innovations in Network Industries”. ",
year = "2014",
month = nov,
doi = "10.1016/j.ijindorg.2014.07.003",
language = "English",
volume = "37",
pages = "1--12",
journal = "International Journal of Industrial Organization",
issn = "0167-7187",
publisher = "Elsevier BV * North-Holland",
number = "1",
}