Monday Smackdown/Hoisted from the Archives: Four Huge Mistakes in One Short Piece by John Taylor

There are lots and lots of business practices that could and should be ruled illegal restrains on trade: Colleen Cunningham, Florian Ederer, and Song Ma: Killer Acquisitions: "This paper argues incumbent firms may acquire innovative targets solely to discontinue the target’s innovation projects and preempt future competition. We call such acquisitions “killer acquisitions.” We develop a parsimonious model illustrating this phenomenon. Using pharmaceutical industry data, we show that acquired drug projects are less likely to be developed when they overlap with the acquirer’s existing product portfolio, especially when the acquirer’s market power is large due to weak competition or distant patent expiration. Conservative estimates indicate about 6% of acquisitions in our sample are killer acquisitions. These acquisitions disproportionately occur just below thresholds for antitrust scrutiny...