Why do so many high-priced acquisitions of entrepreneurial firms take place in network industries? We develop a theory … reducing bidding competition, thereby also reducing acquisition prices and innovation incentives. …

. The theory presented suggests that this is consistent with technology transfer costs, which outweigh trade costs for …

We show that, in the case when innovations are for sale, increased product market competition, captured by reduced … the bidding competition for the innovation and by increasing the relative profitability of being the most efficient firm … in the industry. Moreover, it is shown that increased intensity of competition can increase the relative profitability of …

cost inefficiencies, due to a "least danger to competition" (LDC) condition, which favors small, and thus inefficient …

Taxation theory rarely takes entrepreneurship into consideration. We discuss how this omission affects conclusions … entrepreneurship often omitted by standard capital taxation theory are incorporated into the analysis. This includes the lack of a well … cannot be readily divided into labor and capital income, in stark contrast to what is assumed in standard taxation theory …