Re:Amazon is reportedly negotiating to acquire MGM for about...
by nerdponx on Tuesday May 18, 2021 @01:11PM
(#27197781)
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."
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."