Can partial horizontal ownership lessen competition more than a monopoly?

Duarte Brito, Ricardo Ribeiro, Helder Vasconcelos

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

In this paper we investigate the anti-competitive effects of partial horizontal ownership in a setting where: (i) two cost-asymmetric firms compete à la Cournot; (ii) managers deal with eventual conflicting interests of the different shareholders by maximizing a weighted sum of the two firms’ operating profits; and (iii) weights result from the corporate control structure of the firm they run. Within this theoretical structure, we find that if the manager of the more efficient firm weights the operating profit of the (inefficient) rival more than its own profit, then partial ownership will lessen competition more than a monopoly when both firms produce.

Original languageEnglish
Pages (from-to)90-95
Number of pages6
JournalEconomics Letters
Volume176
DOIs
Publication statusPublished - 1 Mar 2019

Keywords

  • Common-ownership
  • Cost asymmetries
  • Cross-ownership
  • Duopoly
  • Monopoly
  • Partial horizontal ownership

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