@article{doi:10.1111/j.1468-2354.2011.00671.x,
author = {Chatterjee, Satyajit and Rossi-Hansberg, Esteban},
title = {SPINOFFS AND THE MARKET FOR IDEAS*},
journal = {International Economic Review},
volume = {53},
number = {1},
pages = {53-93},
doi = {10.1111/j.1468-2354.2011.00671.x},
url = {https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-2354.2011.00671.x},
eprint = {https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1468-2354.2011.00671.x},
abstract = {We present a theory of entry through spinoffs where workers generate ideas and possess private information concerning their quality. Because quality is privately observed, adverse selection implies that the market can only offer a price that reflects the average quality of ideas sold. Only workers with good ideas decide to spin off, whereas workers with mediocre ideas sell them. Existing firms pay a price for ideas sold in the market that implies zero expected profits. Hence, firms’ project selection is independent of firm size, which can lead to scale-independent growth. This mechanism results in invariant firm-size distributions that resemble the data.},
year = {2012}
}