IBSS hosting faculty Acquisition-induced kill zone
Organised by: RCE 3 (Decision Making in Business)
Presentation Title: Acquisition-induced kill zone
Time and Date: 11:00 - 12:00, Saturday, 14 December 2024 (Beijing time)
Language: English
Onsite location: BS 574
Abstract:
We study the impact of a dominant incumbent’s acquisition on entry and R&D incentives in a model with multiple startups. The incumbent’s acquisition directly suppresses entry and can distort the non-target startup’s R&D incentives by creating a kill zone. The reduced threat of entry can also cause the incumbent to shelve the acquired technology. Despite these negative effects, acquisitions generally affect consumer welfare ambiguously due to synergy benefits. We study the design of merger policies aimed at minimizing acquisition-related harms. We also show that entry-for-buyout may not be a valid defence for startup acquisitions when accounting for non-target startups.
Presenter: Dr. Chengsi Wang, Monash University
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