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  • Firms should stop pretending that high-profile mergers will benefit consumers

    The Los Angeles Times - 07/28/2015

    Moviegoers didn’t suffer when Disney bought Pixar. Google’s acquisition of YouTube, and Facebook’s purchase of Instagram, didn’t appear to weaken those free online services.

    But these are examples of deals that weren’t intended to squeeze more revenue from customers through greater market power. Rather, they involved creation of new opportunities for growth.

    John Kwoka, an economist at Northeastern University, said some small-scale mergers do result in modestly lower consumer prices, “but that’s a distinct minority.” Among high-profile deals, he said, it’s difficult to find evidence that consumers enjoyed any of the benefits pledged by companies.

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