and the resultant feedback effect on firm-level innovation-related investment (IRI). By modeling the unique aspects of … firm-specific and systematic drivers of innovation profits, we derive a positive relation of idiosyncratic volatility of …

' signaling-driven investment, despite the risk of buying a bad innovation. We finally show at what point the presence of active …

aggressive development of a basic innovation by better informed venture-backed firms is used as a signaling device to enhance the … sale price of the innovation. We then show that incumbents can undertake early, preemptive, acquisitions to prevent such … signaling driven overinvestment, despite the risk of buying a non-productive innovation. Therefore, to exist in equilibrium …

This paper documents that firms increasingly finance innovation with their stock of innovation, measured as patents. We … refer to this behavior as financing innovation with innovation. Drawing on patent collateral data from the US and China, we … US firms, (3) firms increase their borrowing and innovation activities once they start to engage in patent collateral. We …

This paper analyzes innovation races in a moral hazard setting. I develop a model where two competing entrepreneurs …

Past work has shown that failure tolerance by principals has the potential to stimulate innovation, but has not … ― in terms of an investor's required share of equity ― that increases in the level of radical innovation. Financiers with … tolerant. Since policies to stimulate innovation must often be set before specific investments in innovative projects are made …

costs, but competition helps to erode innovators' informational rents. Consequently, competition leads to faster innovation …

government support of innovation and the government's optimal choice between subsidies and innovation prizes. We also analyze the …