Wealth Effects of Merger Activity in Two-Sided Markets:a Case Study of Google

• Main Authors: Chang, Ting-Yu, 張廷宇
• Other Authors: Chung, Huimin
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/xqwbyk

碩士 === 國立交通大學 === 財務金融研究所 === 101 === Online Industry is constant evolving, more and more merchants moved their advertisement from newspapers and magazines to the online advertising platform. Among those in the online industry, the largest search engine Google, which has a simple profit model, and keep providing new services to enter different web ecosystem, either by R&;D’s or merger activities, provide a testing ground for researching web-economy. However, its profit model is somewhat different from traditional supply chain, in recent years, economists have developed a theory, which is called “Two-sided market” to explain such kind of business model. The study took a view of Google’s merger activity, and used Two-sided market theory to analyze its purpose and motivation, dividing its purpose into three kinds: improve its advertisement capacity, enhance its free services to strengthen its user base, and third, get large user base directly from acquisition. And then examine the abnormal return of Google’s stock during the announcement period; to see what influence the three different kinds of merger has on Google’s stock holder’s wealth. The empirical result showed that, the merger which can directly get large user base has the most positive abnormal return in the short run. This is consistent with cases that many firms in the online industry acquired company with large user base for high price. Studies’ that discuss merger activity in Two-sided market usually focus on economic effects, welfare and anti-trust, lack of research on financial market reaction, the study combined two-sided market theory, merger hypothesis and empirical study to provide another way to examine two-sided network effects, besides economic theory and model.