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To Keep Students Focused, Try Paying Their ParentsWhat Economists Think about the AT&T/Time Warner Deal
- November 09, 2016
- CBR - Economics
When AT&T agreed in October to purchase Time Warner for $85.4 billion, the market quickly weighed in on whether the deal was good for the two companies: AT&T’s stock price dipped by 2 percent, and Time Warner’s fell 3 percent. But whether the merger will be good for consumers is still an open question. While regulators have yet to react, president-elect Donald Trump has vowed to block the sale, denouncing it as creating “too much concentration of power in the hands of too few.”
What do economists think? Chicago Booth’s Initiative on Global Markets asked its Economic Experts Panel whether such a deal would increase consumer surplus over the course of a decade. Though there were some skeptics, the prevailing outlook was uncertainty, as unanswered questions and the history of similar mergers leave the future effects of the deal in doubt.
Oliver Hart, Harvard
“Possible, but no reason to think it is likely. It may not even be good for the two firms. The merged entity may have too much political power.”
Response: Disagree
Judith Chevalier, Yale
“This is one where the actual data that will be evaluated by the agencies is crucial to forming a conclusion.”
Response: Uncertain
Richard H. Thaler, Chicago Booth
“Bigger does not always mean worse. As a United flier my consumer surplus went up when they merged with Continental. Don't know here.”
Response: Uncertain
Robert Shimer, University of Chicago
“This is mostly vertical integration, which should reduce double marginalization.”
Reponse: Agree
About the IGM Economic Experts Panel
To assess the extent to which economists agree or disagree on major public policy issues, Booth’s Initiative on Global Markets has assembled and regularly polls a diverse panel of expert economists, all senior faculty at the most elite research universities in the United States. The panel includes Nobel laureates and John Bates Clark medalists, among others. Questions are emailed individually to the panel members, and panelists may consult whatever resources they like before answering. Members of the public are free to suggest questions.
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