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Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry

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  • PATRICK DENNIS
  • KRISTOPHER GERARDI
  • CAROLA SCHENONE

Abstract

Institutions often own equity in multiple firms that compete in the same product market. Prior research has shown that these institutional “common owners” induce anticompetitive pricing behavior in the airline industry. This paper reevaluates this evidence and shows that the documented positive correlation between common ownership and airline ticket prices stems from the market share component of the common ownership measure, and not the ownership and control components. We further show that the results are sensitive to measures of investor control and to assumptions about equity holders' ownership and control during bankruptcy.

Suggested Citation

  • Patrick Dennis & Kristopher Gerardi & Carola Schenone, 2022. "Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry," Journal of Finance, American Finance Association, vol. 77(5), pages 2765-2798, October.
    • Handle: RePEc:bla:jfinan:v:77:y:2022:i:5:p:2765-2798
    DOI: 10.1111/jofi.13176
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    References listed on IDEAS

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    1. Li, Xuelin & Liu, Tong & Taylor, Lucian A., 2023. "Common ownership and innovation efficiency," Journal of Financial Economics, Elsevier, vol. 147(3), pages 475-497.

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