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The impact on market outcomes of the portfolio selection of large equity investors

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  • Moreno Ruiz, Diego
  • Petrakis, Emmanuel

Abstract

We study a setting in which several large investors select their portfolios of equity of the firms competing in a symmetric duopoly considering the impact of their interests on the managerial incentives. Assuming that investors objective is to maximize the value of their portfolios, we show that equilibrium portfolios will be symmetric, contributing to enhance the anticompetitive impact of the presence of large investors on price mark ups and profits.

Suggested Citation

  • Moreno Ruiz, Diego & Petrakis, Emmanuel, 2021. "The impact on market outcomes of the portfolio selection of large equity investors," UC3M Working papers. Economics 33659, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:33659
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    References listed on IDEAS

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    1. José Azar & Martin C. Schmalz & Isabel Tecu, 2018. "Anticompetitive Effects of Common Ownership," Journal of Finance, American Finance Association, vol. 73(4), pages 1513-1565, August.
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    6. Jan De Loecker & Jan Eeckhout & Gabriel Unger, 2020. "The Rise of Market Power and the Macroeconomic Implications [“Econometric Tools for Analyzing Market Outcomes”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 561-644.
    7. Sato, Susumu & Matsumura, Toshihiro, 2020. "Free entry under common ownership," Economics Letters, Elsevier, vol. 195(C).
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    9. 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.
    10. Stenbacka, Rune & Van Moer, Geert, 2021. "Cross ownership and divestment incentives," Economics Letters, Elsevier, vol. 201(C).
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    Cited by:

    1. Moreno, Diego & Petrakis, Emmanuel, 2022. "The impact on market outcomes of the portfolio selection of large equity investors," Economics Letters, Elsevier, vol. 212(C).
    2. Xu, Lili & Zhang, Yidan & Matsumura, Toshihiro, 2022. "Cournot–Bertrand comparison under common ownership in a mixed oligopoly," MPRA Paper 114644, University Library of Munich, Germany.
    3. Hirose, Kosuke & Matsumura, Toshihiro, 2023. "Green transformation in oligopoly markets under common ownership," Energy Economics, Elsevier, vol. 126(C).
    4. Lili Xu & Yidan Zhang & Toshihiro Matsumura, 2023. "Competition mode and common ownership in a mixed oligopoly," Manchester School, University of Manchester, vol. 91(4), pages 306-319, July.
    5. Liu, Yi & Matsumura, Toshihiro, 2022. "Welfare effects of common ownership in an international duopoly," MPRA Paper 115177, University Library of Munich, Germany.

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    More about this item

    Keywords

    Market Power;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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