Tuesday, June 29, 2021

The "Kill Zone": Copying, Acquisition and Start-Ups' Direction of Innovation

The "Kill Zone": Copying, Acquisition and Start-Ups' Direction of Innovation

 

Massimo Motta

Universitat Pompeu Fabra

Sandro Shelegia

Universitat Pompeu Fabra, Department of Economics and Business, Students; Barcelona Graduate School of Economics (Barcelona GSE); Centre for Economic Policy Research (CEPR)

Abstract

The possibility of being acquired by the incumbent tends to push the rival towards developing a substitute rather than a complement. By choosing the former, potential gains from the acquisition are created (in the form of suppression of competition): as long as the rival has some bargaining power in the determination of the takeover price, it will then benefit from entering the "kill zone".

https://lawprofessors.typepad.com/antitrustprof_blog/2021/06/the-kill-zone-copying-acquisition-and-start-ups-direction-of-innovation.html

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