M&A and early investment decisions by digital platforms

Abstract

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. Synergies through technological transfer and increased investment incentives in customer engagement 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.

Enhancing Self-Leadership in Online Fitness Education and Training: Exploring Strategies and Addressing Challenges Among Social Media Influencers in Henan Province, China

“…Liu, 2022). The rise of SMIs specializing in digital fitness education reflects the increasing demand for convenient fitness resources through virtual platforms, driven by factors like time constraints and geographical limitations (Brutti & Rojas, 2022). Moreover, this study emphasizes the distinct challenges faced by SMIs in Henan Province in establishing self-leadership effectively within online fitness education and training, including managing remote teams and maintaining quality standards across digital platforms (Wei & Kang, 2019).…”