This paper examines how entrepreneurs and incumbents differ in R&D strategies. We show that entrepreneurs have incentives to choose projects with higher risk and a higher potential in order to reduce expected commercialization costs. However, entrepreneurs may still select too safe projects from...

We develop a theory of innovation for entry and sale into oligopoly, and show that inventions of higher quality are more likely to be sold (or licensed) to an incumbent due to strategic product market effects on the sales price. Such preemptive acquisitions by incumbents are shown to stimulate...

In many countries entrepreneurship is promoted through tax reductions for small businesses and by various government support schemes. We analyze the effects of such policies to subsidize small businesses in a setting where both the risk-return characteristics of the selected innovation project...

How can a country improve the productivity growth in its business sector and reach its growth potential? Sweden during the 1970–2010 period can serve as an example to help other countries understand how to efficiently reform a business sector. In the 1990s, Sweden implemented a reform package...

We show how temporary ownership by private equity firms affects industry structure, competition and welfare. Temporary ownership leads to strong investment incentives because equilibrium resale prices are determined by buyers incentives to block rivals from obtaining assets. These incentives...

Elite skills have become crucial in today's superstar economy. We develop a multi-period skill-formation model where we show that individuals with temporary disadvantages must exert greater effort to gain access to elite education. This "underdog-incentive effect" implies that "educated...

We propose a management career model where females face a gender-specific career hurdle. We show that female managers will, on average, be more skilled than male managers, since females from the low end of the talent distribution will abstain from investing in a career as a manager. The average...

Within the policy debate, there is a fear that large incumbent firms buy small firms' inventions to ensure that they are not used in the market. We show that such "acquisitions for sleep" can occur if and only if the quality of a process invention is small; otherwise, the entry profit will be...

Over the past two decades, private equity has contributed to a shrinking of the U.S. stock market. We develop a political economy model of private equity activity to study the wider economic consequences of this trend. We show that private and social incentives to delist firms from the stock...

We analyze how the Bosman ruling affected the market for star players and talent development in the European football market. We develop a model with sports competition and endogenous ownership of star players in which we show how the stiffer bidding competition over star players after the...