1,720,985 research outputs found
Startup Acquisitions: Acquihires and Talent Hoarding
No full textWe study how competitive forces may drive firms to inefficiently acquire startup
talent. In our model, two rival firms have the capacity to acquire and integrate
a startup operating in a possibly orthogonal market. We show that firms may
pursue such “acquihires” primarily as a preemptive strategy, even when these transactions appear unprofitable in isolation. Thus, acquihires, even absent traditional
competition-reducing effects, need not be benign as they can lead to inefficient talent allocation. Additionally, our analysis underscores that such talent hoarding can
diminish consumer surplus and exacerbate job volatility for acquihired employees
Delegating performance evaluation
No full textWe study optimal incentive contracts with multiple agents when performance is evaluated by a reviewer. The reviewer may be biased in favor of the agents, but the degree of bias is unknown to the principal. We show that a contest, which is a contract in which the principal fixes a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer’s potential leniency bias. The optimal effort profile can be uniquely implemented by an all-pay auction with a cap. Our analysis has implications for various applications, such as the design of worker compensation or the allocation of research grants
Research Joint Ventures: The Role of Financial Constraints
No full textThis paper provides a novel theory of research joint ventures for financially
constrained firms. When firms choose R&D portfolios, an RJV can help to
coordinate research efforts, reducing investments in duplicate projects. This
can free up resources, increase the variety of pursued projects and thereby
increase the probability of discovering the innovation. RJVs improve innovation
outcomes when market competition is weak and external financing conditions are
bad. An RJV may increase the innovation probability and nevertheless lower
total R&D costs. RJVs that increase innovation also increase consumer surplus
and tend to be profitable, but innovation-reducing RJVs also exist. Finally, we
compare RJVs to innovation-enhancing mergers
Designing Dynamic Research Contests
No full textThis paper studies the optimal design of dynamic research contests. We introduce interim transfers, which are paid in every period while the contest is ongoing, to an otherwise standard setting. We show that a contest where: (i) the principal can stop the contest in any period, (ii) a constant interim transfer is paid to agents in each period while the contest is ongoing, and (iii) a final prize is paid once the principal stops the contest, is optimal for the principal and implements the first-best.Revised version, August 201
KILLER ACQUISITIONS AND BEYOND: POLICY EFFECTS ON INNOVATION STRATEGIES
No full textThis article provides a theory of strategic innovation project choice by incumbents and start-ups which serves as a foundation for the analysis of acquisition policy. We show that, in spite of countervailing incentives on incumbents and entrants, prohibiting acquisitions has a weakly negative overall innovation effect. We provide conditions determining the size of the effect and conditions under which it is zero. We further analyze the effects of less restrictive policies, including merger remedies and the tax treatment of acquisitions and initial public offerings. Such interventions tend to prevent acquisitions only if the entrant has sufficiently high stand-alone profits
Optimal Contest Design: A General Approach
No full textWe consider the design of contests for n agents when the principal can choose both the prize profile and the contest success function. Our framework includes Tullock contests, Lazear-Rosen tournaments and all-pay contests as special cases, among others. We show that the optimal contest has an intermediate degree of competitiveness in the contest success function, and a minimally competitive prize profile with n−1 identical prizes. The optimum can be achieved with a nested Tullock contest. We extend the model to allow for imperfect performance measurement and
for heterogeneous agents. We relate our results to a recent literature which has asked similar questions but has typically focused on the design of either the prize profile or the contest success functio
Killer Acquisitions and Beyond: Policy Effects on Innovation Strategies
No full textThis paper provides a theory of strategic innovation project choice by incumbents
and start-ups. We show that prohibiting killer acquisitions strictly reduces the variety
of innovation projects. By contrast, we find that prohibiting other acquisitions only
has a weakly negative innovation effect, and we provide conditions under which the
effect is zero. Furthermore, for both killer and other acquisitions, we identify market
conditions under which the innovation effect is small, so that prohibiting acquisitions
to enhance competition would be justified
Inducing Variety: A Theory of Innovation Contests
No full textThis article analyzes the design of innovation contests when the quality of an innovation depends on the research approach, but the best approach is unknown. Inducing a variety of research approaches generates an option value. We show that suitable contests can induce such variety. The buyer‐optimal contest is a bonus tournament, where suppliers can choose only between a low bid and a high bid. This contest implements the socially optimal variety for a suitable parameter range. Finally, we compare the optimal contest to scoring auctions and fixed‐prize tournaments
Going Beyond Counting First Authors in Author Co-citation Analysis
No full textThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
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