Common Ownership and Competition in Product Markets

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

Koch, Andrew and Panayides, Marios A. and Panayides, Marios A. and Thomas, Shawn, Common Ownership and Competition in Product Markets (February 6, 2020). 29th Annual Conference on Financial Economics & Accounting 2018, Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2965058 or http://dx.doi.org/10.2139/ssrn.2965058