IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v327y2025i1p340-351.html
   My bibliography  Save this article

Strategic capacity investment with common ownership

Author

Listed:
  • De Giovanni, Domenico
  • Ruble, Richard
  • Zormpas, Dimitrios

Abstract

We study how common ownership affects the magnitude and dynamics of investments in a duopoly. Followers exhibit less aggressive timing and quantity reactions because they internalize their effects on leaders. Leaders are therefore more likely to opt for a deterrence strategy, but their own internalization of followers softens their decisions. If firm roles are exogenous, high common ownership links lead to a relatively efficient staged investment outcome. Conversely, if firm roles are endogenous, high common ownership drives the winner of the preemption race to concede a “follower monopoly.” Our numerical analysis finds that common ownership is generally detrimental to consumer surplus and welfare.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:ejores:v:327:y:2025:i:1:p:340-351
    DOI: 10.1016/j.ejor.2025.05.026
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221725004102
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2025.05.026?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:

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • 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

    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:eee:ejores:v:327:y:2025:i:1:p:340-351. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    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.