Common ownership, corporate control and price competition

Recognition Program

Authors: Anna Bayona, Angel Luis López and Anton-Giulio Manganelli

Journal of Economic Behavior and Organization, Vol. 200, 1066–1075, August, 2022

We examine price competition with homogeneous products in the presence of general common ownership arrangements allowing for different corporate control structures. We show that equilibria with positive profits exist (including the monopoly outcome) when the manager places the same weight on the profit of her firm as on the average profit of all the other firms. This condition supports symmetric and asymmetric stakes and can arise as an equilibrium of a network formation game or a bargaining process.

This paper is acknowledged by the Barcelona School of Economics Recognition Program