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Anti-competitive effects of partial cross-ownership: Experimental evidence

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  • Hariskos, W.
  • Königstein, M.
  • Papadopoulos, K.G.

Abstract

In theory, partial cross-ownership affects product prices and consumer welfare negatively, but empirical evidence is highly controversial. For competition policy it is important whether such effects are substantial enough to cause action. We report a lab experiment on a Cournot duopoly with symmetric passive cross-ownership in which we increase the degree of cross-ownership from 10% (treatment LOW) to 40% (treatment HIGH). We find an increase in price that is substantial enough to be considered problematic from an anti-trust perspective. In addition we show that part of the price increase is caused by increasing collusion.

Suggested Citation

  • Hariskos, W. & Königstein, M. & Papadopoulos, K.G., 2022. "Anti-competitive effects of partial cross-ownership: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 399-409.
    • Handle: RePEc:eee:jeborg:v:193:y:2022:i:c:p:399-409
    DOI: 10.1016/j.jebo.2021.11.027
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    Cited by:

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    2. Wang, Shuangjin & Zhang, Xiaoqian & Cebula, Richard J. & Foley, Maggie, 2024. "Cross-shareholding, Managerial capabilities, and Strategic risk-taking in enterprises: A game or a win-win?," Finance Research Letters, Elsevier, vol. 62(PB).
    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. Murray, Cameron & Helm, Tim, 2022. "Ownership illusions: When ownership really matters for economic analysis," OSF Preprints cw8ze, Center for Open Science.
    5. Charistos, Konstantinos & Papadopoulos, Konstantinos G., 2022. "Cartel reporting under passive common ownership," Economics Letters, Elsevier, vol. 216(C).
    6. Lu, Chao & Zhu, Tianqi & Xia, Xiaoxue & Zhao, Ziying & Zhao, Yiwen, 2024. "Common institutional ownership and corporate green investment: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1123-1149.

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    More about this item

    Keywords

    Cross–ownership; Common ownership; Minority shareholdings; Silent financial interest; Cournot experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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