Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, May 22, 2019

Can Partial Horizontal Ownership Lessen Competition More Than a Monopoly?

By: Duarte Brito (Universidade Nova de Lisboa, Faculdade de Ciências e Tecnologia | Center for Advanced Studies in Management and Economics); Ricardo Ribeiro (Universidade Católica Portuguesa, Católica Porto Business School); Helder Vasconcelos (Universidade do Porto, Faculdade de Economia and Center for Economics and Finance)
Abstract: In this paper we investigate the anti-competitive e¤ects of partial horizontal ownership in a setting where: (i) two cost-asymmetric ?rms compete à la Cournot; (ii) managers deal with eventual con?icting interests of the di¤erent shareholders by maximizing a weighted sum of rms?operating pro?ts; and (iii) weights result from the corporate control structure of the ?rm they run. Within this theoretical structure, we ?nd that if the manager of the more e¢ cient rm weights the operating pro?t of the (ine¢ cient) rival more than its own pro?t, then partial ownership can lessen competition more than a monopoly.

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