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Non-monotonic entry dynamics in oligopoly with common ownership

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 show how common ownership fundamentally transforms entry in an uncertain market from sequential preemption into a regime of coordination with contest-like dynamics. We do this by studying an industry with three firms facing a stochastically evolving demand that internalize the effect of their entry and output decisions on rivals. Equilibrium exhibits an accordion effect with respect to internalization: common ownership softens the last entry, intensifies competition at the duopoly stage, and ultimately slows down first market entry, reducing overall dynamism. But unlike in two-firm industries, a coordination equilibrium emerges at the duopoly stage if option value is high enough. The contest-like dynamics in this equilibrium accelerate first entry and raise welfare.

Suggested Citation

  • Domenico DeGiovanni & Richard R. Ruble & Dimitrios Zormpas, 2026. "Non-monotonic entry dynamics in oligopoly with common ownership," Discussion Paper Series 2026_11, Department of Economics, University of Macedonia, revised Nov 2026.
    • Handle: RePEc:mcd:mcddps:2026_11
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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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