European Business Schools Librarian's Group
IESE Research Papers,
IESE Business School
No D/1169: Anti-Competitive Effects of Common Ownership
José Azar (), Martin Schmalz () and Isabel Tecu ()
Additional contact information
José Azar: IESE Business School, Postal: IESE Business School. Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Martin Schmalz: University of Michigan, Ross School of Business, Postal: 701 Tappan Ave, Ann Arbor, MI 48109, USA
Isabel Tecu: Charles River Associates, Postal: Boston, Massachusetts, United States
Abstract: Many natural competitors are jointly held by a small set of large institutional investors. In the US airline industry, taking common ownership into account implies increases in market concentration that are ten times larger than what is ¿presumed likely to enhance market power¿ by antitrust authorities. We find a robust correlation between within-route changes in common ownership concentration and route-level changes in ticket prices, also when we only use variation in ownership due to the combination of two large investors. We conclude that a hidden social cost ¿ reduced product market competition ¿ accompanies the private benefits of diversification and good governance.
Keywords: Competition; Ownership; Diversification; Pricing; Antitrust; Governance; Product Market
82 pages, May 18, 2017
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WP-1169-E.pdf
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