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> I'm curious how this could possibly turn out to be anything but anti-consumer. ... this particular one seems questionable. Again... why? The easiest vertica

> I'm curious how this could possibly turn out to be anything but anti-consumer. ... this particular one seems questionable. Again... why? The easiest vertical merger cases I teach to undergrads are welfare-improving. I don't see any reason to think that this one is anti-consumer. What do you think will go wrong here? > I would like them to carefully and thoroughly evaluate the welfare effects of this merger, They will b/c that's what they do. The OP to whom I was replying suggested that the FTC had "failed" us somehow. I would not expect the FTC to find any grounds to block this acquisition, though I could be wrong.

nerdponx 5y ago
It's been a while since I studied industrial organization, but isn't the basic idea behind the "textbook" vertical merger that some of the reduced marginal costs of production get passed on to the consumer in the form of higher quantity and lower price? That probably would happen, by way of more MGM properties becoming available and costing less on the Amazon streaming platform. My concern is that "welfare of consumers who use Amazon to stream MGM movies" is not a useful proxy for "overall effect on society". Moreover, Amazon is already vertically integrated. They are already a movie and TV studio. They already own and produce a lot of their own content. What is the broader effect on the market? Will this snowball into further acquisitions that don't benefit consumers later? None of that is covered by the textbook model. Unless there's serious research that corroborates the textbook outcome in a "realistic" (messy) scenario like this, I can't set my prior to anything but "extremely pessimistic."