Cross-ownership and stability in a Cournot duopoly
This paper analyses the dynamics of a Cournot duopoly under cross-ownership participation when players have heterogeneous, i.e. bounded rational and naïve, expectations. We find that when the shareholder that owns firm also holds a percentage of firm , the parametric stability region of the unique Cournot-Nash equilibrium is larger than when every firm is owned by a unique shareholder, and an increase in the fraction of shares that the shareholder that owns firm has in firm tends to stabilise the market equilibrium. Moreover, when products are (horizontally) differentiated, a rise in the fraction of shares of firm held by the shareholder that owns firm acts as an economic (de)stabiliser when products of variety and are (complements) substitutes between each other. The policy implication is that, despite on the one hand, cross-ownership acts as an anti-competitive device that indeed tends to reduce social welfare with the corresponding anti-trust consequences, on the other hand, it acts as an economic stabiliser (except when products are complements).
|Date of creation:||07 Nov 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Agiza, H.N. & Hegazi, A.S. & Elsadany, A.A., 2002. "Complex dynamics and synchronization of a duopoly game with bounded rationality," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 58(2), pages 133-146.
- Rupayan Pal, 2010.
"How much should you own? Cross-ownership and privatization,"
Indira Gandhi Institute of Development Research, Mumbai Working Papers
2010-015, Indira Gandhi Institute of Development Research, Mumbai, India.
- Rupayan Pal, 2012. "How much should you own? Cross-ownership and privatization," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-008, Indira Gandhi Institute of Development Research, Mumbai, India.
- Agiza, H.N. & Elsadany, A.A., 2003. "Nonlinear dynamics in the Cournot duopoly game with heterogeneous players," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 320(C), pages 512-524.
- Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
- Zhang, Jixiang & Da, Qingli & Wang, Yanhua, 2007. "Analysis of nonlinear duopoly game with heterogeneous players," Economic Modelling, Elsevier, vol. 24(1), pages 138-148, January.
- repec:ebl:ecbull:v:15:y:2007:i:6:p:1-8 is not listed on IDEAS
- Luciano Fanti & Luca Gori, 2011.
"The dynamics of a differentiated duopoly with quantity competition,"
2011/121, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
- Fanti, Luciano & Gori, Luca, 2012. "The dynamics of a differentiated duopoly with quantity competition," Economic Modelling, Elsevier, vol. 29(2), pages 421-427.
- Fanti, Luciano & Gori, Luca, 2011. "The dynamics of a differentiated duopoly with quantity competition," MPRA Paper 33477, University Library of Munich, Germany.
- Eirik S. Amundsen & Lars Bergman, 2002. "Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 73-95.
- Tramontana, Fabio, 2010. "Heterogeneous duopoly with isoelastic demand function," Economic Modelling, Elsevier, vol. 27(1), pages 350-357, January.
- Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February.
- Bárcena-Ruiz, Juan Carlos & Campo, María Luz, 2012.
"Partial cross-ownership and strategic environmental policy,"
Resource and Energy Economics,
Elsevier, vol. 34(2), pages 198-210.
- Bárcena Ruiz, Juan Carlos & Campo Corredera, María Luz, 2011. "Partial cross-ownership and strategic environmental policy," IKERLANAK 2011-47, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
- Trivieri, Francesco, 2007. "Does cross-ownership affect competition?: Evidence from the Italian banking industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 17(1), pages 79-101, February.
- Juan Carlos Bárcena-Ruiz & Norma Olaizola, 2006.
"Cost-Saving Production Technologies And Strategic Delegation ,"
Australian Economic Papers,
Wiley Blackwell, vol. 45(2), pages 141-157, 06.
- Bárcena Ruiz, Juan Carlos & Olaizola Ortega, María Norma, 2004. "Cost-Saving production technologies and strategic delegation," IKERLANAK 2004-12, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
- Alley, Wilson A, 1997. "Partial Ownership Arrangements and Collusion in the Automobile Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 45(2), pages 191-205, June.
- Inés Macho-Stadler & Thierry Verdier, 1991.
"Strategic managerial incentives and cross ownership structure: A note,"
Journal of Economics,
Springer, vol. 53(3), pages 285-297, October.
- Macho, I. & Verdier, T., 1989. "Strategic Managerial Incentives and Cross Ownership Structure: A Note," DELTA Working Papers 89-02, DELTA (Ecole normale supérieure).
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:34574. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.