 Big Tech AcquisitionsLuis Cabral No 18272, CEPR Discussion Papers from Centre for Economic Policy Research Abstract: I develop and calibrate a game of startup innovation, incumbent acquisition and merger review, with a focus on industries with uncertainty about the nature of the entrant (complementor or substitute with respect to the incumbent). I estimate that moving from balance of probabilities (the current US and EU system) to balance of harms (proposed for, though not adopted, in the UK) leads to a 15% welfare increase. A complete ban on mergers, in turn, would imply a 35% welfare decrease. No enforcement at all is not significantly different from balance of probabilities. Finally, committing to a more lenient standard than balance of harms increases welfare: under balance of harms, about 25% of all mergers would be blocked, whereas the optimal threshold would lead to only 15% of all mergers being blocked, which in turn would imply an additional 2% increase in welfare. The ordering of proposals is very robust to changes in key parameters. I consider some extensions of the basic framework, including reverting the burden of proof of pro-competitive effects. Keywords: Mergers and acquisitions; Merger policy; Digital platforms (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:18272 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK. |
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