Acquihires and Talent Hoarding
We present a model of (partial) startup acquisitions, which may give rise to inefficient ``talent hoarding''. There are two competing firms, which can sequentially try to ``acquihire'' a startup operating in an orthogonal market. Such an acquihire, the acquisition and integration of the startup, gives rise to a relative efficiency gain to the acquiring firm. We show that acquihires need not necessarily be associated with hiring talented employees as is often argued, but can be symptoms of anti-competitive behavior, leading to inefficiencies. Applying our reduced-form model, we show that acquihires may reduce consumer surplus and lead to more job volatility for acquihired employees. We extend our baseline model in various directions, in particular, also allowing for partial investments, and thus show the robustness of the incentives to hoard talent.