Acquisition-Induced Kill Zones

Résumé

We study how acquisitions by a dominant incumbent affect entry and R&D incentives in markets with multiple startups. We show that acquisitions can create a kill zone, which suppresses entry and distorts the innovation direction of nontargeted startups. The resulting reduced threat of entry may lead the incumbent to shelve the acquired technology. The kill zone effect strengthens targeted startups’ incentives to enter primarily to be bought out and makes acquisitions more attractive to the incumbent than in-house R&D. To balance kill zone distortions to innovation against the potential synergies from acquisitions, a consumer welfare–maximizing merger policy may involve blocking some, but not all, acquisitions.

Mots-clés

Référence

Christopher Teh, Dyuti Banerjee et Chengsi Wang, « Acquisition-Induced Kill Zones », Management Science, 2026, à paraître.