DP17404 The Sale of Data: Learning Synergies Before M&As
Firms may share information to discover potential synergies between their data sets and algorithms, which eventually may lead to more eﬃcient mergers and acquisitions (M&A) decisions. However, as pointed out by Arrow, information sharing also modiﬁes the competitive balance when companies do not merge, and a ﬁrm may be reluctant to share information with potential rivals. Under general conditions, we show that ﬁrms beneﬁt from (partially) sharing information. Because more sharing of information may increase industry expected proﬁts both when there is head-to-head competition and when there is an M&A, the presence of a regulator who can prevent or allow the M&A can decrease or increase the level of information sharing, as well as consumer surplus, with respect to the no-regulator case. A regulator who can also control the level of information sharing will allow ﬁrms to share information.