Divesting ownership in a rival

Duarte Miguel Machado Carneiro de Brito, Luís M. B. Cabral, Helder Vasconcelos

Research output: Contribution to journalArticlepeer-review

23 Citations (Scopus)
39 Downloads (Pure)


Abstract We examine the consumer welfare effect of a firm's partial ownership of a competitor and compare the implications of alternative forms of divestiture. We identify conditions under which turning voting shares into non-voting shares is preferable to selling the shares to the firm's current shareholders (an option frequently chosen). We also show that selling the voting shares to a large independent shareholder is preferable to selling them to small shareholders. We provide additional theoretical results and apply them to the divestiture of Portugal Telecom's holdings in PTM.
Original languageEnglish
Pages (from-to)9 - 24
JournalInternational Journal of Industrial Organization
Issue number1
Publication statusPublished - May 2014


  • Control
  • Divestiture
  • Oligopoly
  • Preferred stock


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