Free Entry under Common Ownership

Sato, Susumu and Matsumura, Toshihiro (2019): Free Entry under Common Ownership.

Abstract

This study investigates the equilibrium and welfare properties of free entry under common ownership. We formulate a model in which incumbents under common ownership choose whether to enter a new market. We find that an increase in common ownership reduces entries, which may or may not improve welfare. Welfare has an inverted-U shaped relationship with the degree of common ownership. However, if firms do not have common ownership before the entry, after entry common ownership harms welfare.

• Item Type: MPRA Paper
• Language: English
• Keywords: Overlapping ownership; Free entry, Insufficient entry, Excessive entry, Circular markets
• 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 > L22 - Firm Organization and Market Structure

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