Free entry under common ownership

Susumu Sato and Toshihiro Matsumura

Economics Letters, 2020, vol. 195, issue C

Abstract: This study investigates the equilibrium and welfare properties of free entry under common ownership. We formulate a model in which incumbents under common ownership choose whether to enter a new market. Using a circular-market model, we find that an increase in common ownership reduces entries, which may or may not improve welfare. Welfare has an inverted-U shaped relationship with the degree of common ownership, which implies that there is a strictly positive optimal degree of common ownership.

Keywords: Overlapping ownership; Free entry; Insufficient entry; Excessive entry; Circular markets (search for similar items in EconPapers)
JEL-codes: L13 L22 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Working Paper: Free Entry under Common Ownership (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:195:y:2020:i:c:s0165176520303013

DOI: 10.1016/j.econlet.2020.109489

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