At the Competence-Centre on Microeconomic Evaluation (CC-ME) we advise and support EU policy making through ex-post causal evaluation and data-driven microeconomic analysis.

The CC-ME hosts a Microeconometric Seminar Series to promote discussions with external researchers from academia and other institutions.

Our Seminar Series is intended to disseminate advanced research methodologies and topics in the field of microeconomic evaluation. To further disseminate the benefits of our Series across the JRC, we post a summary of the presented papers together with the presenters' views and opinions on their research and the future of the field of Applied Economics.

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Q: What attracted you to research the topics in your paper?

A: Mergers and acquisitions in the startup ecosystem is a controversial topic in the antitrust/competition policy arena. Startups are companies established by entrepreneurs to create a profitable business.

Only part of the startups will become profitable standalone businesses. Acquisitions might constitute an exit alternative to bankruptcy. Acquisitions might also be an instrument to suppress nascent competition: Large companies might buy start-ups in order to prevent them from becoming competitors, or even to shut them down. 

Such acquisitions are known as "killer acquisitions". From a policy perspective, it is not obvious how to single out "killer acquisitions". The relevant policy question is how to design a merger control system that incentivizes investment in startups and promotes innovation and competition, but prevents "killer acquisitions".

Our research shows that acquisitions play an essential role in the startup ecosystem and can provide a valuable exit path for startups that are not able to go public or that are struggling to succeed on their own. 

Thus, policies that generally inhibit startup acquisitions could lead to more startup failures, discourage investment in startups, and reduce innovation and competition.

Q: Where is the research area where your paper fits moving?

A: There is a growing literature analyzing the link between competition and innovation and the magnitude and consequences of the killer acquisitions phenomenon (Ivaldi et al. (2023),  Brutti and Rojas (2022), and Cunningham et al. (2021)). The aim of this literature is to achieve a better understanding of the startups lifecycle in order to adopt informed policy decisions.

Q: What, in your opinion, will the next breakthrough in Game Economics be

A: As for competition economics, the industry dynamics of innovation intensive industries remains a challenge. We have witnessed the emergence of thousands of tech startups and a few examples of spectacular growth. The dynamics of innovation intensive industries is substantially different from traditional industries and, thus, additional empirical work in this field is required to design effective regulation and inform policy decisions.