Abstract

http://ssrn.com/abstract=1782793
 
 

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Ownership and Control in a Competitive Industry


Heiko Karle


ETH Zurich - Center for Law and Economics; ETH Zurich

Tobias J. Klein


Tilburg University - Department of Econometrics & Operations Research; Tilburg University - Center for Economic Research (CentER); Institute for the Study of Labor (IZA); Netspar; Tilburg Law and Economics Center (TILEC)

Konrad O. Stahl


University of Mannheim - Department of Economics; Centre for Economic Policy Research (CEPR)

March 10, 2011

CentER Discussion Paper No. 2011-026

Abstract:     
We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a non-controlling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se.

Number of Pages in PDF File: 40

Keywords: Differentiated Products, Separation of Ownership and Control, Private Benefits

JEL Classification: L13, L41

working papers series


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Date posted: March 10, 2011 ; Last revised: April 20, 2011

Suggested Citation

Karle, Heiko and Klein, Tobias J. and Stahl, Konrad O., Ownership and Control in a Competitive Industry (March 10, 2011). CentER Discussion Paper No. 2011-026. Available at SSRN: http://ssrn.com/abstract=1782793 or http://dx.doi.org/10.2139/ssrn.1782793

Contact Information

Heiko Karle
ETH Zurich - Center for Law and Economics ( email )
IFW E 45.1
Haldeneggsteig 4
Zurich, 8092
Switzerland
ETH Zurich ( email )
IFW E 45.1
Haldeneggsteig 4
Zurich, 8092
Switzerland
+41-44-632-6029 (Phone)
Tobias J. Klein
Tilburg University - Department of Econometrics & Operations Research ( email )
Tilburg, 5000 LE
Netherlands
HOME PAGE: http://center.uvt.nl/staff/klein/index.html
Tilburg University - Center for Economic Research (CentER)
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Institute for the Study of Labor (IZA) ( email )
P.O. Box 7240
Bonn, D-53072
Germany
Netspar
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Tilburg Law and Economics Center (TILEC)
Warandelaan 2
Tilburg, 5000 LE
Netherlands
Konrad O. Stahl (Contact Author)
University of Mannheim - Department of Economics ( email )
D-68131 Mannheim
Germany
+49 621 181 1875 (Phone)
+49 621 181 1874 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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