Monday, February 18, 2019

Can Partial Horizontal Ownership Lessen Competition More Than a Monopoly?

Duarte Brito, New University of Lisbon, Ricardo Ribeiro, Universidade Católica Portuguesa, Católica Porto Business School, and Helder Vasconcelos, Universidade do Porto - Faculdade de Economia (FEP) ask Can Partial Horizontal Ownership Lessen Competition More Than a Monopoly?

ABSTRACT: In this paper we investigate the anti-competitive effects of partial horizontal ownership in a setting where: (i) two cost-asymmetric firms compete à la Cournot; (ii) managers deal with eventual conflicting interests of the different shareholders by maximizing a weighted sum of firms' operating profits; and (iii) weights result from the corporate control structure of the firm they run. Within this theoretical structure, we find that if the manager of the more efficient firm weights the operating profit of the (inefficient) rival more than its own profit, then partial ownership can lessen competition more than a monopoly.

https://lawprofessors.typepad.com/antitrustprof_blog/2019/02/can-partial-horizontal-ownership-lessen-competition-more-than-a-monopoly.html

| Permalink

Comments

Post a comment