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Overlapping Ownership, Sequential Moves and Welfare

Author

Listed:
  • Domenico DeGiovanni

    (Aarhus University School of Business and Social Sciences; Universita degli Studi della Calabria)

  • Richard R. Ruble

    (EM Lyon (Ecole de Management de Lyon))

  • Dimitrios Zormpas

    (University of Macedonia Department of Economics)

Abstract

We introduce overlapping ownership into a sequential move duopoly and find conditions where internalization has positive welfare effects in contrast with other standard oligopoly models. Internalization of rival profits softens follower output and entry decisions, inducing more aggressive leader behavior. In Stackelberg equilibrium follower internalization raises total output and welfare provided the follower is active. The effect is stronger if demand is more convex which makes the follower less responsive. In an entry deterrence setting, higher symmetric internalization that shifts equilibrium from accommodation to deterrence raises welfare relative to a benchmark with independent firms. Product differentiation attenuates the first effect but is necessary for the second effect if firms compete in prices.

Suggested Citation

  • Domenico DeGiovanni & Richard R. Ruble & Dimitrios Zormpas, 2026. "Overlapping Ownership, Sequential Moves and Welfare," Discussion Paper Series 2026_10, Department of Economics, University of Macedonia, revised Oct 2026.
    • Handle: RePEc:mcd:mcddps:2026_10
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    Keywords

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    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

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