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Downstream cross-holdings and upstream advertising

Author

Listed:
  • Qing Hu

    (Kushiro Public University of Economics)

  • Tomomichi Mizuno

    (Kobe University)

Abstract

We investigate a supply chain comprising a upstream firm engaged in advertising and two downstream firms who compete with differentiated products. We find that the producer surpluses always decrease with the degree of the cross-holdings between the downstream firms, if the upstream firm engages in informative advertising. This result contradicts the conventional wisdom that cross-holdings benefit the participants because firms become less competitive with the degree of cross-holdings. In addition, we also find that our main results are robust under upstream persuasive advertising.

Suggested Citation

  • Qing Hu & Tomomichi Mizuno, 2025. "Downstream cross-holdings and upstream advertising," Discussion Papers 2506, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:2506
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