Cross Holding and Imperfect Product Markets
AbstractWe consider a setting in which two firms first choose equity positions in each others stock (cross holdings) and then compete in an imperfect product market. We demonstrate that cross holdings lead to higher firm profits and higher consumer surplus when the competitors’ products are complements. We find that cross holdings lead to lower firm profits and higher consumer surplus when the products are substitutes. This finding is in contrast to the existing literature which establishes that cross holdings leads
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Bibliographic InfoPaper provided by New York University, Leonard N. Stern School of Business- in its series New York University, Leonard N. Stern School Finance Department Working Paper Seires with number 99-058.
Date of creation: Sep 1999
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Postal: U.S.A.; New York University, Leonard N. Stern School of Business, Department of Economics . 44 West 4th Street. New York, New York 10012-1126
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Other versions of this item:
- Matthew J. Clayton & Bjorn N. Jorgensen, 1998. "Cross Holding and Imperfect Product Markets," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-020, New York University, Leonard N. Stern School of Business-.
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