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Downstream cross-holdings and divestment incentives under bilateral bargaining

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  • Mukherjee, Arijit
  • Zeng, Chenhang

Abstract

We study the stability of downstream cross-holdings in a bilateral duopoly with firm-specific bargaining. We show that the downstream firms never (partially, completely) divest shares if the upstream firms have significant (medium, low) bargaining power.

Suggested Citation

  • Mukherjee, Arijit & Zeng, Chenhang, 2024. "Downstream cross-holdings and divestment incentives under bilateral bargaining," Economics Letters, Elsevier, vol. 242(C).
    • Handle: RePEc:eee:ecolet:v:242:y:2024:i:c:s0165176524003793
    DOI: 10.1016/j.econlet.2024.111895
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    References listed on IDEAS

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    1. David Gilo & Yossi Moshe & Yossi Spiegel, 2006. "Partial Cross Ownership and Tacit Collusion," RAND Journal of Economics, The RAND Corporation, vol. 37(1), pages 81-99, Spring.
    2. George Symeonidis, 2008. "Downstream Competition, Bargaining, and Welfare," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(1), pages 247-270, March.
    3. Rupayan Pal & Emmanuel Petrakis, 2024. "Cross-ownership in duopoly: Are there any incentives to divest?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2024-003, Indira Gandhi Institute of Development Research, Mumbai, India.
    4. Qing Hu & Aika Monden & Tomomichi Mizuno, 2022. "Downstream Cross‐Holdings and Upstream R&D," Journal of Industrial Economics, Wiley Blackwell, vol. 70(3), pages 775-789, September.
    5. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
    6. Stenbacka, Rune & Van Moer, Geert, 2021. "Cross ownership and divestment incentives," Economics Letters, Elsevier, vol. 201(C).
    7. David Gilo & Yossi Moshe & Yossi Spiegel, 2006. "Partial cross ownership and tacit collusion," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 81-99, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bilateral duopoly; Bargaining power; Cross-holdings; Divestment incentive;
    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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