Product differentiation and duopoly: when social welfare benefits from cross-shareholding
AbstractThe present paper analyses the effects on social welfare of a partial crossparticipation at ownership level in a differentiated Cournot duopoly. We show that cross-participation, despite the fact it appears as an anti-competitive practice which reduces the degree of market competition, may increase social welfare when the products are complements between them, and, moreover, not only profit but also consumer’s welfare is enhanced. Therefore, the policy implication is that in industries characterised by product complementarity larger cross-participations at ownership level should be allowed, despite their anticompetitive nature.
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Bibliographic InfoPaper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2011/129.
Date of creation: 11 Jan 2011
Date of revision:
Complementary products; Cross-ownership; Duopoly; Product differentiation; Social welfare.;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L4 - Industrial Organization - - Antitrust Issues and Policies
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