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Ownership and Control in a Competitive Industry

Author

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  • Karle, Heiko
  • Klein, Tobias J.
  • Stahl, Konrad O.

Abstract

We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a noncontrolling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se.

Suggested Citation

  • Karle, Heiko & Klein, Tobias J. & Stahl, Konrad O., 2011. "Ownership and Control in a Competitive Industry," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 350, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    • Handle: RePEc:trf:wpaper:350
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    Citations

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    Cited by:

    1. Samuel de Haas, 2019. "Endogenous choice of minority shareholdings: Effects on product market competition," MAGKS Papers on Economics 201912, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. 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.
    3. Hunold, Matthias & Röller, Lars-Hendrik & Stahl, Konrad, 2012. "Backwards integration and strategic delegation," ZEW Discussion Papers 12-022, ZEW - Leibniz Centre for European Economic Research.
    4. López, Ángel Luis & Vives, Xavier, 2016. "Cross-ownership, R&D Spillovers, and Antitrust Policy," CEPR Discussion Papers 11315, C.E.P.R. Discussion Papers.
    5. Hunold, Matthias & Röller, Lars-Hendrik & Stahl, Konrad, 2012. "Backwards Integration and Strategic Delegation," CEPR Discussion Papers 8910, C.E.P.R. Discussion Papers.
    6. Paha, Johannes & de Haas, Samuel, 2016. "Partial cross ownership and explicit collusion," VfS Annual Conference 2016 (Augsburg): Demographic Change 145640, Verein für Socialpolitik / German Economic Association.
    7. Samuel Haas & Johannes Paha, 2021. "Non-Controlling Minority Shareholdings and Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 431-454, May.
    8. Brito, Duarte & Cabral, Luís & Vasconcelos, Helder, 2014. "Divesting ownership in a rival," International Journal of Industrial Organization, Elsevier, vol. 34(C), pages 9-24.
    9. Samuel de Haas & Johannes Paha, 2016. "Partial cross ownership and collusion," MAGKS Papers on Economics 201632, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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    More about this item

    Keywords

    Differentiated products; separation of ownership and control; private benefits of control;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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