Wednesday, March 31, 2021

Common Ownership, Corporate Control and Price Competition

Common Ownership, Corporate Control and Price Competition

Anna Bayona

ESADE Business School

Ángel L. López

Autonomous University of Barcelona

Anton-Giulio Manganelli

EADA Business School; CRES-UPF

Abstract

We examine price competition with homogeneous products in the presence of general common ownership arrangements allowing for different corporate control structures. Common ownership leads managers to internalize other firms profits. We show that equilibria with positive profits exist (including the monopoly out- come) when the manager places the same weight on the profit of her firm as on the average profit of all the other firms. This condition supports symmetric and asymmetric stakes and can arise as an equilibrium of a network formation game or a bargaining process.

https://lawprofessors.typepad.com/antitrustprof_blog/2021/03/common-ownership-corporate-control-and-price-competition.html

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