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Common ownership and creative destruction: evidence from US consumers

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  • Hadiye Aslan

Abstract

How does common ownership affect creative destruction? What are the underlying mechanisms? Do the effects of increased common ownership vary among different customer segments? Using product-level data, we show that, on average, firms with greater common ownership introduce new products at a faster rate and discontinue existing products at a similar pace. The observed economic impacts intensify over time, reflecting the gradual nature of knowledge spillovers and the learning curve. Subsequent to an increase in common ownership, portfolio firms tend to both add and drop products that are dissimilar to those of their rival firms, with the net effect of decreasing between-firm product dissimilarity. We also find that the effects are more relevant for product modules with greater technological likeness, lower barriers to market entry, and greater numbers of product market players. Product variety is substantially greater in product lines catering to higher-income households. Overall, the result highlights the procompetitive effects of increased common ownership.

Suggested Citation

  • Hadiye Aslan, 2024. "Common ownership and creative destruction: evidence from US consumers," Review of Finance, European Finance Association, vol. 28(3), pages 865-896.
  • Handle: RePEc:oup:revfin:v:28:y:2024:i:3:p:865-896.
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    File URL: http://hdl.handle.net/10.1093/rof/rfad043
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    More about this item

    Keywords

    Common ownership; Product innovation; Creative Destruction; Knowledge spillovers; Scanner data;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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