Common ownership and competition in product markets |
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| Authors: | Andrew Koch Marios Panayides Shawn Thomas |
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| Institution: | 1. Katz Graduate School of Business, University of Pittsburgh, Mervis Hall, Pittsburgh, PA 15260, USA;2. Department of Accounting and Finance, School of Economics and Management, University of Cyprus, P.O. Box 20537, CY-1678, Nicosia, Cyprus;1. Oslo Metropolitan University, Oslo Business School, Pilestredet 46, Oslo 0130, Norway;2. The Arctic University of Norway, Hansine Hansens veg 18, Tromsø N-9019, Norway;3. Department of Banking and Finance, Monash University, 900 Dandenong Rd., Caulfield East VIC 3145, Australia;1. Deutsche Bundesbank, Wilhelm-Epstein-Str. 14, 60431 Frankfurt am Main, Germany;2. Erasmus School of Economics, Erasmus University Rotterdam, Burgemeester Oudlaan 50, PO Box 1738, 30000 DR Rotterdam, the Netherlands;1. Rutgers Business School, Rutgers University, Newark, NJ 07102, USA;2. Gies College of Business, University of Illinois at Urbana-Champaign, Champaign, IL 61820, USA;3. Yonsei Business School, Yonsei University, Seoul 03722, Republic of Korea;4. Wharton School, University of Pennsylvania, PA 19104, USA;1. Geneva Finance Research Institute, University of Geneva and SFI, Uni Mail, Bd du Pont-d’Arve 42, Geneva 4 1211, Switzerland;2. Bocconi University, Via Roberto Sarfatti, 25, 20136 Milan, Italy;3. CEPR and ECGI, Italy;4. Booth School of Business, University of Chicago, Chicago, IL, United States;5. NBER, United States;1. Department of Economics and Business Economics, Aarhus University, Fuglesangsallé 4, Aarhus V. 8210, Denmark;2. Danish Finance Institute, Solbjerg Plads 3 (A4.03), Frederiksberg 2000, Denmark;3. Rady School of Management, University of California San Diego, La Jolla, CA 92093-0553, USA;4. CREATES, Aarhus University, Fuglesangsallé 4, Aarhus V. 8210, Denmark;5. Robert H. Smith School of Business, University of Maryland, College Park, MD 20742-1815, USA |
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| Abstract: | We investigate the relation between common institutional ownership of the firms in an industry and product market competition. We find that common ownership is neither robustly positively related with industry profitability or output prices nor is it robustly negatively related with measures of nonprice competition, as would be expected if common ownership reduces competition. This conclusion holds regardless of industry classification choice, common ownership measure, profitability measure, nonprice competition proxy, or model specification. Our point estimates are close to zero with tight bounds, rejecting even modestly sized economic effects. We conclude that antitrust restrictions seeking to limit intra-industry common ownership are not currently warranted. |
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