M&A and Early Investment Decisions by Digital Platforms
Brutti, Zelda (Universitat Pompeu Fabra)
Rojas Dueñas, Luis Eduardo (Universitat Autònoma de Barcelona)

Data:	2022
Resum:	We propose an original theoretical framework that models early investment decisions of digital platform startups and use it to study how merger and acquisition policy affects consumer welfare by shaping such decisions. We formalize the investment options faced by digital platforms into a dual margin: investment in 'customer engagement technology', directed towards expanding the user base and in 'intermediation technology', directed towards lowering operational costs. Sinergies through technological transfer and increased investment incentives in customer engagment explain consumer welfare improvements in the case of M&As occurring between platforms with disjoint user bases. On the other hand, lower competition erodes consumer welfare in the case of allowing M&As between platforms with overlapping user bases. We conclude that M&A policy guidance should depend on the relationship between the incumbent's and startup's target users and on the ability of the startup to catch up with the incumbent.
Ajuts:	Ministerio de Economía y Competitividad CEX2019-000915-S
Nota:	Altres ajuts: APMPAL (GA324048)
Drets:	Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original.
Llengua:	Anglès
Col·lecció:	Barcelona GSE Working Paper Series ; 1304
Document:	Working paper
Matèria:	Digital platforms ; Mergers and acquisitions ; Investment

27 p, 721.9 KB

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