Estimating Oligopoly with Shareholder Voting Models

39 Pages Posted: 20 Dec 2021 Last revised: 23 Mar 2022

See all articles by José Azar

José Azar

University of Navarra, IESE Business School; CEPR; ECGI

Ricardo M. Ribeiro

Universidade Católica Portuguesa, Católica Porto Business School

Date Written: March 18, 2022


We develop an empirical model of overlapping ownership conduct. The model (i) links firm conduct parameters to deep parameters of the firm's process of shareholder preference aggregation through voting; (ii) can cope with ownership settings involving both intra- and inter-industry overlapping ownership; and (iii) yields an equilibrium flexible formulation for the management’s objective function that allows for no internalization, partial internalization and full internalization of shareholder objectives by managers. Using data for the U.S. airline industry in the 2015-2017 period, we find evidence for a partial internalization formulation in which managers put significant weight on shareholder objectives, but substantially less than in the full-internalization limiting case. We find also that inter-industry overlapping ownership is associated to lower inferred marginal costs, and that omitting inter-industry overlapping ownership leads to substantial bias towards zero in the parameters that drive how much intra-industry overlapping ownership is internalized by the firms. Finally, we find, focusing on the 2017Q4 period, that overlapping ownership overall (both intra- and inter-industry) seems to increase the average airline fare by 4.0%, increase industry profit by 24.4% and decrease consumer surplus by 1.8%, and that these effects are mostly due to overlapping ownership by shareholders other than the “Big Three” asset managers.

Keywords: Market Power, Overlapping Ownership, Structural Estimation, Antitrust Policy, Managerial Entrenchment, Airline Industry

JEL Classification: D12, D22, L13, L21, L93

Suggested Citation

Azar, José and Ribeiro, Ricardo, Estimating Oligopoly with Shareholder Voting Models (March 18, 2022). IESE Business School Working Paper , Available at SSRN: or

José Azar

University of Navarra, IESE Business School ( email )

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CEPR ( email )

United Kingdom

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Ricardo Ribeiro (Contact Author)

Universidade Católica Portuguesa, Católica Porto Business School ( email )

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Porto, 4169-005
+351-22619-6200 (Phone)
+351-22619-6291 (Fax)


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