We challenge the view that the presence of powerful buyers stifles suppliers' incentives to innovate. Following Katz (1987), we model buyer power as buyers' ability to substitute away from a given supplier and isolate several effects that support the opposite view, namely that the presence of...

We show that the success probability, financial contract, pre-money valuation, and value created in a start-up firm depend strongly on the characteristics of the capital market in which the start-up raises finance, such as the level of capital supply and degree of capital market competition,...

This article shows that investors financing a portfolio of projects may use the depth of their financial pockets to overcome entrepreneurial incentive problems. Competition for scarce informed capital at the refinancing stage strengthens investors' bargaining positions. And yet, entrepreneurs'...

We analyze up- and downstream market structure and the choice of technology in a bilaterally oligopolistic industry. The distribution of industry profits between up- and downstream firms is determined by a procedure of bilateral negotiations, which is shown to generate the Shapley value....

We show that the pricing, contractual structure, and efficiency of venture capital deals depends on characteristics of the capital market in which the start-up raises finance. Market characteristics such as the expected return on investments, entry costs, and capital market transparency all...