Common ownership and competition in product markets
By Andrew Koch, Marios A. Panayides, Shawn Thomas. Journal of Financial Economics, 2021
171 citations recorded by the source corpus.
Abstract We investigate the relation between common institutional ownership of the firms in an industry and product market competition. We find that common ownership is neither robustly positively related with industry profitability or output prices nor is it robustly negatively related with measures of nonprice competition, as would be expected if common ownership reduces competition. This conclusion holds regardless of industry classification choice, common ownership measure, profitability measure, nonprice competition proxy, or model specification. Our point estimates are close to zero with tight bounds, rejecting even modestly sized economic effects. We conclude that antitrust restrictions seeking to limit intra-industry common ownership are not currently warranted.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/37863f962339dc84582dfce4b466104392d49652
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Citations in the corpus
- Common Ownership, Competition, and Top Management Incentives (2016, background): “In line with our prediction, in the reduced-form empirical studies of Aslan (2019) and Koch et al. (2020), price-cost markups are not consistently positively correlated with measures of common ownership. Similarly, the structural analysis of Backus et al. (2021) in which the profit weights κij are n”