Friday, July 24, 2020

Free Entry under Common Ownership

Free Entry under Common Ownership


Sato, Susumu; Matsumura, Toshihiro


This study investigates the equilibrium and welfare properties of free entry under common ownership. We formulate a model in which incumbents under common ownership choose whether to enter a new market. We find that an increase in common ownership reduces entries, which may or may not improve welfare. Welfare has an inverted-U shaped relationship with the degree of common ownership. However, if firms do not have common ownership before the entry, after entry common ownership harms welfare.


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