The Great Start-up Sellout and the Rise of Oligopoly
AEA Papers and Proceedings
vol. 113,
May 2023
(pp. 274-78)
Abstract
We document a secular shift from initial public offerings to acquisitions of venture capital-backed start-ups and show that this trend is accompanied by an increase in the opportunity cost of going public over the last quarter-century. Dominant companies that are disproportionately active in the corporate control market for start-ups have become more insulated from the pressures of product market competition over the same period. These facts are consistent with the hypothesis that start-up acquisitions have contributed to rising oligopoly power.Citation
Ederer, Florian, and Bruno Pellegrino. 2023. "The Great Start-up Sellout and the Rise of Oligopoly." AEA Papers and Proceedings, 113: 274-78. DOI: 10.1257/pandp.20231024Additional Materials
JEL Classification
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- G24 Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- L13 Oligopoly and Other Imperfect Markets
- M13 New Firms; Startups