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Tommaso Valletti Profile picture
Tommaso Valletti
@TomValletti
Econ professor @imperialcollege. Londoner, made in 🇮🇹. Flute über alles 🎵
May 6 • 4 tweets • 2 min read
Very interesting paper by Annika Stöhr just published in JCLE @OxUniPress

Meta-study on merger retrospectives. Main result: there seems to be a structural presumption -> mergers involving “large” firms are those with ex post increases in prices.


1/ academic.oup.com/jcle/advance-a…
Image What’s particularly interesting is that these are all mergers that a) were vetted by comp authorities & b) were approved. Hence you'd expect prices either to stay constant or to go down because of the alleged efficiencies – right?

Wrong: in 52% of the cases prices went up.

2/ Image
Oct 6, 2021 • 8 tweets • 4 min read
Exactly 450 years ago, 7 October 1571, one of the greatest sea battles ever: the Battle of #Lepanto. 1/ The battle was between the Holy League (commanders were Don Juan of Austria - Spain and half brother of Philipp II, Sebastiano Venier - Venice and Marcantonio Colonna - Papal States) and the Ottomans (led by Ali Pasha who died in the battle). 2/
Oct 31, 2020 • 4 tweets • 2 min read
Thought-provoking piece – yet again! – from Germán Gutiérrez and @ThomasPHI2.

Common wisdom about dominant firms in the digital economy at odds with productivity paradox. Tremendous innovations by large “superstar” alongside lacklustre aggregate productivity growth. True?

1/ 1. Market share of dominant firms has not increased (Panel A: domestic sales to domestic GDP; Panel B: consolidated global sales to global GDP).

2. Relative productivity of dominant firms has not increased since 90s (Panel A: top US firms; Panel B: global stars).

2/
Oct 30, 2020 • 4 tweets • 1 min read
There’s this @ecipe study (funded by Google) making the rounds, alleging that the European Commission's DSA will cost 2 million jobs and €85 billion per year in lost GDP! That’s a lot.

So I looked into it.

1/ Dubious methodologies and identification, but let’s ignore them. The core of the study is this: they have a bunch of country-sector EU data from 2010 to 2017. They estimate some TFP and see how TFP is affected by an “ex ante regulation” dummy that covers the period 2015-2017.

2/
Sep 13, 2020 • 13 tweets • 4 min read
Thread on research in economics & its linkage to policy.

Recent top publications on hot competition policy topics, eg
@jan_eeckhout & al on increasing margins
@joseazar @martincschmalz & al on common ownership
@cunningham_lbs @florianederer @ProfSongMa on killer acquisitions

1/ These papers freaked out corporate interests. Big Pharma, Big Tech, ‘Passive’ Investors (& good chunk of the legal community who’s behind them) reacted, as expected.

As they don’t know what academic research in economics is, they use shills under semi-academic camouflage.

2/
May 30, 2020 • 8 tweets • 2 min read
Important THREAD on the etymology of CAPPUCCINO.

First the spelling. It’s not capacino, capucino, capucinno, etc.
It's CAPPUCCINO (singular), 2P’s, 2 C’s, 1N. CAPPUCCINI (plural), still 2P’s 2C’s, 1N.

Second the etiquette. 1/ You don’t drink it after noon. You don’t order it after lunch, let alone after dinner. And absolutely terrible to drink it DURING a meal (I feel bad just at the thought of it). You don’t drink it in a plastic cup. You don’t drink it on the go. You don’t drink it with a straw. 2/
Apr 26, 2020 • 6 tweets • 2 min read
I have been asked why, if in normal times we think competition is a feature of market-based economies that produces the best outcomes, we now hear that with corona "putting aside any qualms about competition" should be the best way forward for society (thanks @martincschmalz). 1/ Let me use simple steps using IO. As a starter, I’d say a plausible scenario could be one where there are uninternalized positive externalities, e.g. knowledge spillovers (or coordination problems in the supply chain), so that a competitive equilibrium is not ‘good enough’. 2/
Dec 10, 2019 • 5 tweets • 2 min read
Little THREAD. Remember Zuck's speech at Georgetown? He argued that FB would not remove of political ads because they make so little money (1-2% revenues) from them, so let's keep 'em as it’s good for democracy to expose lies on FB. This is fallacious on 2 grounds possibly 3. 1/ 1) No one really has an idea about how much money FB makes directly from political ads, since their accounts are opaque to say the least. But let me imagine 1-2% is the true figure (still, quite a bit of money since 2019 revenues will be around $90bn). 2/
Nov 4, 2019 • 4 tweets • 2 min read
Phenomenal paper by @DrDaronAcemoglu et al.
It responds to “but people don’t care about privacy”, “I have nothing to hide”, “it’s all about revealed preferences”, “we get a barter, it’s all good”. Too fast.
There is in fact a massive negative externality. Here’s how it goes 1/ With fully rational consumers (a big if), individuals who don’t care about privacy release their data. This compromises those who do care and whose information is correlated. (Cambridge Analytica scandal:data shared by 1/4m FB users but allowed to infer info about 50m users!). 2/
Sep 30, 2019 • 4 tweets • 2 min read
1/ New paper by Aghion et al. that reconciles stylized facts:
- Advances in IT, yet
- Falling long run growth
- Falling labor share due to rising revenue shares of low labor share firms
- Rising firm concentration within industries Image 2/ At policy level, it should be eye-opening to those that can just repeat like robots “Aghion et al. = inverted-U, hence we should do nothing".

Particularly reveling this passage on mergers (page 38):

S* = concentration, ψo = overhead costs. Image
Sep 4, 2019 • 6 tweets • 2 min read
Very interesting and ambitious new paper by young scholar @bpellegr_econ on industry concentration. 1/ Employs a new dataset to measure product similarity (based on computational linguistics of 10-k forms) for every pair of publicly-traded firms in US. 2/
Jul 12, 2019 • 7 tweets • 3 min read
1/ LIBRA THREAD. People are discussing MANY relevant aspects. FED Jerome Powell has “serious concerns”. @matthewstoller has written this interesting piece.


BUT.
Let me offer a personal, additional, possibly narrow, view looking at COMPETITION issues. 2/ My idea has already been bashed, both left (but guys: mine is an ADDITIONAL concern) and Koch brothers-funded right.

[Boys, I do have reply tweets, don’t I?]
Jun 14, 2019 • 9 tweets • 3 min read
Little THREAD on academic research in economics and GAFAs.

Last night I asked myself: how much EMPIRICAL research has been published in ECONOMICS using data from GAFAs? The answer is: almost NONE. Why GAFAs? Well, we talk a LOT about them in competition circles. They are among the very top for market capitalisation. They have TONS of data. This SHOULD attract the attention of economists!
Jun 3, 2019 • 6 tweets • 3 min read
Very interesting and extensive independent report done for @CMAgovUK evaluating past merger decisions in the digital sector
bit.ly/2HRfBiD

1/ Facebook/Instagram problematic: too much weigh put on functionality offered on the users’ side of the market. The Authorities missed the role these functionalities perform in platform’s monetization strategy.

2/
May 23, 2019 • 4 tweets • 2 min read
Carl Shapiro is great economist. He’s produced stellar scholarship, alone, or with Joe Farrell & Mike Katz. He’s now written this piece on competition, for the Journal of Economic Perspectives:



A piece that won’t upset many. Alas, I am disappointed. 1/ faculty.haas.berkeley.edu/shapiro/protec…Image It’s too protective of the status quo when it comes to GAFAs (the G in particular). Take the example below: seriously, should we worry about IBM and ADOBE and NETFLIX in the same way as GAFAs? This is framing.

2/ Image
Apr 4, 2019 • 8 tweets • 2 min read
The @EU_Competition digital report is out! Many, many thanks to @jcremer @yvesalexandre and Heike. Here's my reading on the concrete suggestions for adapting competition policy (THREAD). 1) Consumer welfare standard: Under-enforcement is the problem in the digital world. Even if consumer harm cannot be measured, platforms’ strategies to reduce competition should be forbidden in the absence of clear efficiency gains
Mar 9, 2019 • 8 tweets • 2 min read
What I think when I think about BIG TECH tech - after the #SIEPRSummit.

Bottom line: “We have a BIG problem – especially with Google and Facebook – wake up and DON'T say it’s not about antitrust. Unprecedented phenomena require new thinking.” Let me elaborate in this THREAD
1/ The economics. Markets with formidable network externalities, entry barriers, endogenous sunk costs, business models with ‘free’ goods, consumer behavioural biases and inertia (defaults are kings) -> endemic market failures. 1st fundamental theorem of welfare economics FAILS
2/
Feb 13, 2019 • 13 tweets • 5 min read
Back to the question on vertical mergers (THREAD). I had a little spat with @geoffmanne a short while ago



He sent me a an interesting submission of the Global Antitrust Institute (GAI) of George Mason University to #FTChearings.

1/ They review 13 academic papers from 2009-2018 and conclude “these papers continue to support the conclusions that consumers mostly benefit from vertical integration”. Note, they write *integration*, but we need to know about vertical *mergers*.



2/
Jan 5, 2019 • 9 tweets • 4 min read
THREAD on #monopsony and #antitrust implications

1. Intellectual foundations back to work of Joan Robinson (1933) – eminent woman economist btw, too often neglected. She became full professor only in 1965 – 6 years before retiring 2. Here’s the theory :
-In a competitive labour market, each worker receives her/his marginal product
-Labour supply is upward sloping: need to pay more to attract more workers
-If a single firm buys inputs, will try to BUY LESS in order to drive WAGES DOWN
Dec 19, 2018 • 8 tweets • 2 min read
Little THREAD on killer mergers. Not meant to be scientific, but to open our eyes on magnitudes.

2001-2018: Google has been buying 1 firm per month, every month, for the past 17 years. 1/

en.wikipedia.org/wiki/List_of_m… Since 2010, rate up to 1 firm every 18 days. 99% of the deals not vetted by ANY competition authority for a variety of reasons (rest approved).

Proposals (non exclusive):
-Thresholds based on turnover work ok for mature industries, not for digital and pharma for instance. 2/