Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry

Abstract

Institutional investors often own significant equity in multiple firms competing within the same product markets. A recent debate among legal and financial scholars questions whether competitors with "common owners" engage in anti-competitive behavior. This paper questions the applicability of the theory of horizontal mergers and cross-ownership theory in the context of common ownership, and empirically analyzes the relationship between ticket prices and common ownership in the airline industry. In sharp contrast to the findings in Azar et.al. (2018), we find no evidence of such a relationship.

Keywords: Common Owners, Competition, Airlines

JEL Classification: G30, G34, G32, G38