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IMHO mergers should be illegal. Just never allowed, maybe exceptional circumstances like charities that wouldn't otherwise be able to survive. The reason is I
by lordnacho 4y ago
IMHO mergers should be illegal. Just never allowed, maybe exceptional circumstances like charities that wouldn't otherwise be able to survive.
The reason is I think it tends to reduce the usefulness of the free market. We want a bunch of firms competing to create value for consumers. A bunch of little experiments that say "hey I bet people want purple toothpaste", with a bunch of little failure domains that keep the damage small when it turns out blue is the best color.
Mergers incentivize people to make businesses for reasons other than creating and sharing value with consumers. For instance, a lot of VC backed firms get bought by a larger giant without ever turning a profit. This basically blurs the market's view of whether the widget they're selling is of any use.
Creating larger firms also encourage monopolistic practices about which plenty has been said. But also it means failed products take longer to be taken down as they share infrastructure with non-failed products. And when a giant dies, a lot of fallout happens.
- voisin 4y agoMonopolies can and do occur outside of mergers. And sometimes mergers allow smaller firms to join together to better compete with more dominant firms. I think the answer is to better enforce anti trade laws to ensure competition.
- lordnacho 4y ago> Monopolies can and do occur outside of mergers. They can, but often you find a firm that has grown organically ends up swallowing up a load of smaller firms. For sure trade laws need to actually be followed, but there's a discretion there that is vulnerable to lobbying.
- michaelt 4y ago> Monopolies can and do occur outside of mergers. You're right - and we might want additional rules to address that. But IMHO it's one thing if facebook gains market dominance because users choose their product - that might just be a sign they've got an excellent product. On the other hand, if facebook feels the need to buy Instagram and Whatsapp because users aren't choosing facebook's product? That's a completely different matter.
- cowpig 4y agoLike anything in the real world, an absolute rule like this is inappropriate, but I agree that we need a much higher bar of scrutiny on these kinds of mergers before they are approved.
- Swenrekcah 4y agoA rather simple solution is to tax corporations progressively more with higher revenue or assets. This would counteract the economic incentives to merge towards ever bigger entities.
- bigyikes 4y agoWouldn’t this reduce the effect of “economies of scale”, leading to increased prices for everyone? I like that large companies give me cheap stuff.
- socialismisok 4y agoLarge companies give you cheap stuff by ignoring externalities. Efficiency of production is only one axis, and we absolutely can over optimize that axis.
- senttoschool 4y ago>IMHO mergers should be illegal. Just never allowed, maybe exceptional circumstances like charities that wouldn't otherwise be able to survive. Disagreed. In dying industries, mergers make a lot of sense.
- _-david-_ 4y agoThey would just not merge. They would instead sell the trademark and buildings and then close down and payout their shareholders.