The Great Startup Sellout and the Rise of Oligopoly

Ederer, Florian; Pellegrino, Bruno

doi:10.2139/ssrn.4322834

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The Great Startup Sellout and the Rise of Oligopoly

AEA Papers & Proceedings, Vol. 113, May 2023, Forthcoming

7 Pages Posted: 12 Jan 2023 Last revised: 3 Mar 2023

See all articles by Florian Ederer

Florian Ederer

Boston University - Markets, Public Policy, and Law; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Bruno Pellegrino

Columbia University - Columbia Business School; University of Chicago - George J. Stigler Center for the Study of the Economy and the State; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 11, 2023

Abstract

We document a secular shift from IPOs to acquisitions of venture capital-backed startups 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 startups have become more insulated from the pressures of product market competition over the same period. These facts are consistent with the hypothesis that startup acquisitions have contributed to rising oligopoly power.

Keywords: startups, IPOs, acquisitions, mergers, market power, concentration

JEL Classification: G32, D43, D85, E23, L16, G34

Suggested Citation: Suggested Citation

Ederer, Florian and Pellegrino, Bruno, The Great Startup Sellout and the Rise of Oligopoly (January 11, 2023). AEA Papers & Proceedings, Vol. 113, May 2023, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4322834 or http://dx.doi.org/10.2139/ssrn.4322834

Florian Ederer (Contact Author)

Boston University - Markets, Public Policy, and Law ( email )

Boston, MA
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Bruno Pellegrino

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

University of Chicago - George J. Stigler Center for the Study of the Economy and the State ( email )

Walker Hall
Chicago, IL 60637
United States

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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The Great Startup Sellout and the Rise of Oligopoly

Florian Ederer