Data-driven mergers

Alexandre De Cornière and Greg Taylor
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Alexandre De Cornière: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Greg Taylor: University of Oxford

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Abstract: We study mergers between firms operating in data-connected markets: the data generated as a byproduct of the activity on market A can be used by firms operating on market B. The effects of such a merger depend on whether data trade among independent firms is possible, and on whether data use benefits consumers or leads to more surplus extraction. When data increases product B's quality, the merger benefits consumers on both markets if data cannot be traded absent the merger, and harms them otherwise. When data is used to extract consumer surplus on market B the merger increases consumer surplus on market A and reduces it on market B.

Date: 2025-02-17
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