Anticompetitive Effects of Common Ownership

Many natural competitors are jointly held by a small set of large institutional investors. In the U.S. airline industry, taking common ownership into account implies increases in market concentration that are 10 times larger than what is "presumed likely to enhance market power" by antitru...

Full description

Saved in:
Bibliographic Details
Published in:The Journal of finance (New York) 2018-08, Vol.73 (4), p.1513-1565
Main Authors: AZAR, JOSÉ, SCHMALZ, MARTIN C., TECU, ISABEL
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Air transportation industry
Competitors
Diversification
Economic models
Governance
Institutional investments
Market concentration
Ownership
Power
Prices
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Many natural competitors are jointly held by a small set of large institutional investors. In the U.S. airline industry, taking common ownership into account implies increases in market concentration that are 10 times larger than what is "presumed likely to enhance market power" by antitrust authorities.¹ Within-route changes in common ownership concentration robustly correlate with route-level changes in ticket prices, even when we only use variation in ownership due to the combination of two large asset managers. We conclude that a hidden social cost—reduced product market competition—accompanies the private benefits of diversification and good governance.
ISSN:0022-1082
1540-6261
DOI:10.1111/jofi.12698