Data-Driven Mergers
Alexandre de Cornière, Greg Taylor
Management Science · 2024 · Volume 70 · Issue 9
Abstract
We study mergers between firms operating in data-connected markets: the data generated as a byproduct of the activity in market A can be used by firms operating in market B . The effects of such a merger depend on whether data trade among independent firms is possible and whether data use benefits consumers or leads to more surplus extraction. When data increases product B ’s quality, the merger benefits consumers in both markets if data cannot be traded absent the merger and harms them otherwise. When data are used to extract consumer surplus in market B , the merger increases consumer surplus in market A and reduces it in market B . This paper was accepted by Joshua Gans, business strategy. Funding: This work was supported by Agence Nationale de la Recherche [Grant ANR-17-EURE-0010] (Investissements d’Avenir program) to A. de Cornière; Oxford Internet Institute’s Research Programme on AI, Government, and Policy, funded by the Dieter Schwarz Stiftung gGmbH to G. Taylor; and TSE Digital Center.
Keywords
economics: game theory and bargaining theory, economics: microeconomic behavior, industrial organization: market structure, firm strategy, and market performance
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