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Partial Ownership and Foreclosure: An Empirical Analysis

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  • Reiffen, David

Abstract

This paper examines events associated with Union Pacific (UP) Railroad's attempt to obtain a significant minority share of the voting equity in Chicago Northwestern (CNW) Railroad. Rivals of UP petitioned the ICC to block the transaction, positing a theory of foreclosure that connects UP's partial ownership of CNW to reductions in both the rivals' profits and social welfare. This paper explores this theory's implications more generally and generates a testable implication for the UP/CNW transaction. I test for the predicted effect and find evidence contrary to the predictions of the rivals' theory, but consistent with other theories of partial ownership interests. Copyright 1998 by Kluwer Academic Publishers

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  • Reiffen, David, 1998. "Partial Ownership and Foreclosure: An Empirical Analysis," Journal of Regulatory Economics, Springer, vol. 13(3), pages 227-244, May.
    • Handle: RePEc:kap:regeco:v:13:y:1998:i:3:p:227-44
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    Cited by:

    1. Fiocco, Raffaele, 2016. "The strategic value of partial vertical integration," European Economic Review, Elsevier, vol. 89(C), pages 284-302.
    2. Li, Jin & Yang, Shilei & Shi, Victor & Zhai, Senjing, 2020. "Partial vertical centralization in competing supply chains," International Journal of Production Economics, Elsevier, vol. 224(C).
    3. Cooper, James C. & Froeb, Luke M. & O'Brien, Dan & Vita, Michael G., 2005. "Vertical antitrust policy as a problem of inference," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 639-664, September.
    4. Ryo Masuyama, 2022. "Partial forward ownership and upstream quality investment," Economics Bulletin, AccessEcon, vol. 42(4), pages 1811-1816.

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