Can partial horizontal ownership lessen competition more than a monopoly?

• Type: Article in International Scientific Journal
• Date: 2019

Authors

Brito, D (Author) Other; Ribeiro, R (Author) Other; Helder Vasconcelos (Author) FEP

Journal

Title: Economics Letters

Vol. 176

Pages: 90-95

ISSN: 0165-1765

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 20 Citations

Scopus - 18 Citations

Other information

Authenticus ID: P-00Q-4S1

DOI: 10.1016/j.econlet.2018.12.039

Abstract (EN): In this paper we investigate the anti-competitive effects of partial horizontal ownership in a setting where: (i) two cost-asymmetric firms compete a la Cournot; (ii) managers deal with eventual conflicting interests of the different shareholders by maximizing a weighted sum of the two firms' operating profits; and (iii) weights result from the corporate control structure of the firm they run. Within this theoretical structure, we find that if the manager of the more efficient firm weights the operating profit of the (inefficient) rival more than its own profit, then partial ownership will lessen competition more than a monopoly when both firms produce.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 6