Common Ownership and Competition in Product Markets
84 Pages Posted: 10 May 2017 Last revised: 30 Jan 2019
Date Written: December 20, 2018
This paper empirically investigates the relation between common institutional ownership of the firms in an industry and competition among firms in the industry. 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 greater common ownership encouraged product market rivals to compete less aggressively. 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, and we can statistically reject 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