IDEAS home Printed from https://ideas.repec.org/a/aea/aejmic/v17y2025i4p260-327.html

Common Ownership and Market Entry: Evidence from the Pharmaceutical Industry

Author

Listed:
  • Melissa Newham
  • Jo Seldeslachts
  • Albert Banal-Estañol

Abstract

Common ownership—where several firms are (partially) owned by the same investors—and its impact on product market competition has recently drawn much attention. This paper focuses on its implications for market entry. We consider the entry decisions of generic pharmaceutical firms into drug markets that are opened up by the end of regulatory protection and which were previously dominated by a single firm selling the brand name drug. We find robust evidence that an increase in common ownership leads to a significant reduction in generic entry.

Suggested Citation

  • Melissa Newham & Jo Seldeslachts & Albert Banal-Estañol, 2025. "Common Ownership and Market Entry: Evidence from the Pharmaceutical Industry," American Economic Journal: Microeconomics, American Economic Association, vol. 17(4), pages 260-327, November.
    • Handle: RePEc:aea:aejmic:v:17:y:2025:i:4:p:260-327
    DOI: 10.1257/mic.20220220
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/mic.20220220
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://doi.org/10.3886/E205561V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/materials/24040
    Download Restriction: no
    File URL: https://libkey.io/10.1257/mic.20220220?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Basak, Debasmita, 2025. "Does Common Ownership Distort Entry Incentives In Successive Oligopolies?," EconStor Preprints 319538, ZBW - Leibniz Information Centre for Economics.
    2. Sato, Susumu & Matsumura, Toshihiro, 2020. "Free entry under common ownership," Economics Letters, Elsevier, vol. 195(C).
    3. Chen, Xian, 2024. "Common ownership along the supply chain and supplier innovations," Pacific-Basin Finance Journal, Elsevier, vol. 87(C).
    4. Antonio Estache & Christophe Kieffer, 2021. "Does Common Ownership Influence the Financial Strategy of the French Pharmaceutical Firms?," Working Papers ECARES 2021-09, ULB -- Universite Libre de Bruxelles.
    5. Domenico Buccella & Luciano Fanti & Luca Gori, 2025. "Cross-ownership in network industries: when less competition implies less profits or more social welfare," Journal of Economics, Springer, vol. 144(3), pages 203-230, April.
    6. De Giovanni, Domenico & Ruble, Richard & Zormpas, Dimitrios, 2025. "Strategic capacity investment with common ownership," European Journal of Operational Research, Elsevier, vol. 327(1), pages 340-351.
    7. Ruichang Lu & Qiaowei Shen & Tenghui Wang & Xiaojun Zhang, 2022. "Frenemies: Corporate Advertising Under Common Ownership," Management Science, INFORMS, vol. 68(6), pages 4645-4669, June.
    8. Papadopoulos, Konstantinos G. & Petrakis, Emmanuel & Skartados, Panagiotis, 2019. "Product innovation transfer under passive partial ownership holdings," Economics Letters, Elsevier, vol. 177(C), pages 22-25.
    9. Nuria Boot & Jo Seldeslachts & Albert Banal Estanol, 2022. "Common Ownership: Europe vs. the US," Discussion Papers of DIW Berlin 2015, DIW Berlin, German Institute for Economic Research.
    10. Lysle Boller & Fiona Scott Morton, 2020. "Testing the Theory of Common Stock Ownership," NBER Working Papers 27515, National Bureau of Economic Research, Inc.
    11. Aghaie, Sina & Javadinia, Amir & Mirahmad, Hooman & Janani, Saeed, 2022. "How incumbents’ response strategy impacts rivals’ market exit timing?," Journal of Business Research, Elsevier, vol. 146(C), pages 251-263.
    12. Oz Shy & Rune Stenbacka, 2020. "Common ownership, institutional investors, and welfare," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(3), pages 706-723, July.
    13. Geng, Heng & Hau, Harald & Lai, Sandy & Liu, Pengfei, 2025. "Does shareholder overlap alleviate patent holdup?," Research Policy, Elsevier, vol. 54(2).
    14. Gibbon, Alexandra J. & Schain, Jan Philip, 2023. "Rising markups, common ownership, and technological capacities," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    15. Brito, Duarte & Ribeiro, Ricardo & Vasconcelos, Helder, 2020. "Overlapping ownership, endogenous quality, and welfare," Economics Letters, Elsevier, vol. 190(C).
    16. Rosati, Nicoletta & Bomprezzi, Pietro & Martinez Cillero, Maria, 2024. "Critical dimensions in the empirical measurement of common shareholding," Research in International Business and Finance, Elsevier, vol. 70(PA).
    17. Steven C. Salop & Fiona Scott Morton, 2021. "The 2010 HMGs Ten Years Later: Where Do We Go From Here?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(1), pages 81-101, February.
    18. Gilje, Erik P. & Gormley, Todd A. & Levit, Doron, 2020. "Who's paying attention? Measuring common ownership and its impact on managerial incentives," Journal of Financial Economics, Elsevier, vol. 137(1), pages 152-178.
    19. Shy, Oz & Stenbacka, Rune, 2019. "An OLG model of common ownership: Effects on consumption and investments," Journal of Macroeconomics, Elsevier, vol. 62(C).
    20. Stenbacka, Rune & Van Moer, Geert, 2023. "Overlapping ownership and product innovation," International Journal of Industrial Organization, Elsevier, vol. 89(C).

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmic:v:17:y:2025:i:4:p:260-327. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.