Optimal Cross Holding with Externalities and Strategic Interactions
AbstractWe analyze a two period setting where firms first choose equity positions in each other and second engage in operating activities that cause externalities. Firms facing positive externalities optimally choose long equity positions to increase their profits. Firms facing negative externalities encounter a prisoners' dilemma, where each firm optimally chooses short positions in the first period, committing to a more aggressive operating stance that results in lower profits. In contrast to the prior literature, regulation restricting cross holdings reduces consumer surplus and economic welfare when the number of firms is fixed. However, such regulation can increase entry, improving net welfare.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 78 (2005)
Issue (Month): 4 (July)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JB/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Karle, Heiko & Klein, Tobias & Stahl, Konrad O, 2011.
"Ownership and Control in a Competitive Industry,"
CEPR Discussion Papers, C.E.P.R. Discussion Papers
8277, C.E.P.R. Discussion Papers.
- Heiko Karle & Tobias J. Klein & Konrad O. Stahl, 2011. "Ownership and Control in a Competitive Industry," CESifo Working Paper Series 3380, CESifo Group Munich.
- Karle, Heiko & Klein, Tobias J. & Stahl, Konrad O., 2011. "Ownership and control in a competitive industry," ZEW Discussion Papers 11-071, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Karle, H. & Klein, T.J. & Stahl, K.O., 2011. "Ownership and Control in a Competitive Industry," Discussion Paper, Tilburg University, Center for Economic Research 2011-026, Tilburg University, Center for Economic Research.
- Karle, Heiko & Klein, Tobias J. & Stahl, Konrad O., 2011. "Ownership and Control in a Competitive Industry," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 350, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Karle, H. & Klein, T.J. & Stahl, K.O., 2011. "Ownership and Control in a Competitive Industry," Discussion Paper, Tilburg University, Tilburg Law and Economic Center 2011-013, Tilburg University, Tilburg Law and Economic Center.
- M. Kopel & L. Lambertini, 2012. "On the (non) existence of a price equilibrium in delegation games with relative performance compensation," Working Papers wp807, Dipartimento Scienze Economiche, Universita' di Bologna.
- Chou, Ting-Kai & Ou, Chin-Shyh & Tsai, Shu-Huan, 2014. "Value of strategic alliances: Evidence from the bond market," Journal of Banking & Finance, Elsevier, Elsevier, vol. 42(C), pages 42-59.
- Clayton, Matthew J., 2009. "Debt, investment, and product market competition: A note on the limited liability effect," Journal of Banking & Finance, Elsevier, Elsevier, vol. 33(4), pages 694-700, April.
- Jean-Daniel Guigou & Patrick De Lamirande & Bruno Lovat, 2011. "Strategic delegation and collusion: Do incentive schemes matter?," LSF Research Working Paper Series, Luxembourg School of Finance, University of Luxembourg 11-02, Luxembourg School of Finance, University of Luxembourg.
- Mathews, Richmond D., 2006. "Strategic alliances, equity stakes, and entry deterrence," Journal of Financial Economics, Elsevier, Elsevier, vol. 80(1), pages 35-79, April.
- Goetz, Christopher F. & Shapiro, Adam Hale, 2012. "Strategic alliance as a response to the threat of entry: Evidence from airline codesharing," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 30(6), pages 735-747.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If references are entirely missing, you can add them using this form.