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Welfare raising common ownership with supply chains

Author

Listed:
  • Qing Hu

    (Kansai University)

  • Tomomichi Mizuno

    (Kobe University)

Abstract

Even though the welfare-reducing effects of common ownership have been emphasized in the established researches, we challenge this well-known result by considering a model of two symmetric supply chains, each composed of a manufacturer and its firm-specific input supplier. The common ownership exists in the downstream market. We find that if the degree of common ownership is high, the demand for input becomes elastic, intensifying input price competition. Therefore, the consumer and total surpluses will increase with the degree of common ownership.

Suggested Citation

  • Qing Hu & Tomomichi Mizuno, 2025. "Welfare raising common ownership with supply chains," Discussion Papers 2521, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:2521
    as

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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2025/2521.pdf
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    References listed on IDEAS

    as
    1. Linfeng Chen & Toshihiro Matsumura & Chenhang Zeng, 2024. "Welfare Consequence of Common Ownership in a Vertically Related Market," Journal of Industrial Economics, Wiley Blackwell, vol. 72(2), pages 996-1004, June.
    2. 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.
    3. Toshihiro Matsumura & X. Henry Wang & Chenhang Zeng, 2025. "Welfare improving common ownership in successive oligopolies: The role of the input market," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(1), pages 169-192, February.
    4. Sato, Susumu & Matsumura, Toshihiro, 2020. "Free entry under common ownership," Economics Letters, Elsevier, vol. 195(C).
    5. Vives, Xavier, 2020. "Common ownership, market power, and innovation," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    6. Ángel L. López & Xavier Vives, 2019. "Overlapping Ownership, R&D Spillovers, and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 127(5), pages 2394-2437.
    7. Lewellen, Katharina & Lowry, Michelle, 2021. "Does common ownership really increase firm coordination?," Journal of Financial Economics, Elsevier, vol. 141(1), pages 322-344.
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