Overlapping Ownership, R&D Spillovers, and Antitrust Policy

By Á. López, Xavier Vives. Journal of Political Economy, 2019

263 citations recorded by the source corpus.

This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with overlapping ownership. We show that overlapping ownership leads to internalization of rivals’ profits by firms and find that, for demand not too convex, increases in overlapping ownership increase (decrease) R&D and output for high (low) enough spillovers while they increase R&D but decrease output for intermediate levels of spillovers. There is scope for overlapping ownership to improve welfare and consumer surplus, provided that spillovers are sufficiently large. The results obtained are robust when R&D has commitment value and in a Bertrand oligopoly model with product differentiation.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/bdb319f38f312f4874b455ca23f8208509651b74

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Citations in the corpus

Common Ownership, Competition, and Top Management Incentives (2016, methodology): “To simplify the exposition, we assume that the owners are symmetric as in López and Vives (2019) such that owner i owns a majority stake in firm i and a residual symmetric share in all other firms.”
Common Ownership in America: 1980–2017 (2019, background): “However, in other games, e.g. complementary products, vertical relations or R&D, the welfare effects may be very different, and even positive (Levy, 2018; López and Vives, 2018).”