Demand, supply and the market for potatoes

The role of entry in the competitive process: a case study on Amazon’s investment in Deliveroo

Competition authorities worldwide are concerned about the growing power of Google, Amazon, Facebook and Apple — the so-called ‘GAFA’ firms. In this article, Matt Olczak considers whether Amazon’s investment in Deliveroo would harm competition, and highlights the important role ‘entry’ can play in the competitive process

You can find answers to the questions in this article at www.hoddereducation.co.uk/economicreviewextras

One concern raised by competition authorities is that Google, Amazon, Facebook and Apple have been able to grow by purchasing small, innovative start-ups. Examples include Facebook’s acquisitions of Instagram in 2012 and WhatsApp in 2014. Sometime referred to as ‘killer acquisitions,’ the worry is that the leading tech firms have been acquiring these start-ups to prevent them from posing a significant competitive threat in the future. This contrasts with the conventional wisdom in competition policy where mergers between large firms have been seen as a cause for greater alarm.