Common ownership
In economics, common ownership describes a situation in which large investors own shares in several firms that compete within the same industry. As a result of this overlapping ownership, these firms may have reduced incentives to compete against each other because they internalize the profit-reducing effect that their competitive actions have on each other.
The theory was first developed by Julio Rotemberg in 1984.[1] Several empirical contributions document the growing importance of common ownership and provide evidence to support the theory.[2] Because of concern about these anticompetitive effects, common ownership has "stimulated a major rethinking of antitrust enforcement."[3] The United States Department of Justice,[4] the Federal Trade Commission,[5] the European Commission,[6] and the OECD[7] have all acknowledged concerns about the effects of common ownership on lessening product market competition.
References[edit]
- ↑ Rotemberg, Julio (1984), "Financial Transaction Costs and Industrial Performance", MIT Sloan School of Management, Working Paper No. 1554‐84. [1]
- ↑ Azar, José; Schmalz, Martin; Tecu, Isabel (2018), "Anticompetitive Effects of Common Ownership", Journal of Finance, 73 (4), pp. 1513–1565, doi:10.1086/261117, hdl:1721.1/49091 Unknown parameter
|s2cid=ignored (help) - ↑ Hemphill, Scott; Kahan, Marcel (2020), "The Strategies of Anticompetitive Common Ownership", Yale Law Journal, pp. 18–29.
- ↑ Solomon, Steven Davidoff (2018), "Rise of Institutional Investors Raises Questions of Collusion", New York Times. [2]
- ↑ Federal Trade Commission (2018), "Competition and Consumer Protection in the 21st Century", FTC Hearings on Common Ownership. [3]
- ↑ OECD (2017), "Competition in Changing Times", DG COMP. [4]
- ↑ Vestager, Margrethe (2018), "Common Ownership by Institutional Investors and its Impact on Competition", Competition Committee. [5]
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