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| Tekijä: | Norbäck, P-J. Persson, L. |
| Otsikko: | The organization of the innovation industry: Entrepreneurs, venture capitalists, and oligopolists |
| Lehti: | Journal of the European Economic Association
2009 : DEC, VOL. 7:6, p. 1261-1290 |
| Asiasana: | innovation entrepreneurship venture capital oligopoly moral hazard |
| Kieli: | eng |
| Tiivistelmä: | This article presents a model where incumbents can either acquire basic innovations from entrepreneurs or wait and acquire developed innovations from entrepreneurial firms supported by venture capitalists. The results indicate that venture-backed entrepreneurial firms have an incentive to overinvest in development vis a vis incumbents because of the strategic product effects on the sales price of a developed innovation. This will trigger preemptive acquisitions by incumbents, hence increasing the reward for entrepreneurial innovations. It is also indicated that venture capital can emerge in equilibrium if venture capitalists have cost advantages or if development is associated with double moral hazard problems. |
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