Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry
70 Pages Posted: 2 Nov 2017 Last revised: 15 Nov 2017
Date Written: November 1, 2017
In many markets, institutional investors own significant equity stakes in multiple firms that compete in the same product market. A recent debate among legal and financial scholars has emerged as to whether competitors sharing ``common owners" are enticed to cooperate in the product market and engage in anti-competitive behavior, and this debate has the potential to generate legislation to curtail the number of firms in the same industry that an institutional investor can hold. This paper revisits the empirical evidence on the relationship between prices and common ownership in the airline industry documented in Azar et al. (2017). In contrast to their finding that greater common ownership leads to significantly higher average airline prices, our results suggest that there is no relationship between common ownership and prices in the airline industry.
Keywords: Common Owners, Competition, Airlines
JEL Classification: G30, G34, G32, G38
Suggested Citation: Suggested Citation