Common Ownership with Unlisted Suppliers of Perfectly Complementary Inputs

Tsuritani, Ryosuke (2025): Common Ownership with Unlisted Suppliers of Perfectly Complementary Inputs.

Abstract

Since unlisted firms’ shares are not publicly traded, common ownership only affects listed firms and has no direct impact on unlisted ones. We investigate the welfare implications of this asymmetry between listed and unlisted upstream suppliers of perfectly complementary inputs. This study considers a vertically related market with S perfectly complementary inputs, in which L sole listed upstream suppliers and S-L sole unlisted upstream suppliers sell each input through linear wholesale prices to the two listed downstream manufacturers that compete à la Cournot. We find that the input price of each listed supplier is higher than that of each unlisted supplier only when the number of listed suppliers is small. The key factor contributing to this result is the price sensitivity of listed suppliers. We also find that an optimal rate of common ownership may exist for consumers and society, depending on the proportion of listed suppliers in the supply chain.

• Item Type: MPRA Paper
• Language: English
• Keywords: Common ownership; Vertical market; Perfectly complementary inputs; Listed suppliers; Unlisted suppliers
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L21 - Business Objectives of the Firm; L - Industrial Organization > L4 - Antitrust Issues and Policies > L42 - Vertical Restraints ; Resale Price Maintenance ; Quantity Discounts

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