Price Effects of Common Ownership in the Seed Sector

Abstract

We evaluate the effects of the rise of common ownership in the U.S. seed sector. Using a theoretical model, we illustrate how common ownership changes the nature of competition among firms. Our empirical analysis shows that, even when taking measures to fully separate the effects of market concentration and common ownership, a significant contributor to increase in soy, corn and cotton seed prices over the 1997-2017 period is the rise of common ownership. These findings contribute to the current literature regarding the anticompetitive effects of common ownership and confirm the result of studies performed in other sectors, such as airlines.

Keywords: common ownership, prices, competition, market concentration, seeds, institutional investment

JEL Classification: L41, G32, G34