Common Ownership and Competition in Product Markets
83 Pages Posted: 10 May 2017 Last revised: 16 May 2019
Date Written: May 14, 2019
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 robustly negatively related with measures of non-price competition, as would be expected if common ownership reduces competition. This conclusion holds regardless of industry classification choice, common ownership measure, profitability measure, non-price 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.
Keywords: Common Ownership, Governance, Competition, Horizontal Merger
JEL Classification: G34, L13, L41
Suggested Citation: Suggested Citation