An OLG model of common ownership: Effects on consumption and investments

Oz Shy and Rune Stenbacka

Journal of Macroeconomics, 2019, vol. 62, issue C

Abstract: We analyze how an increase in the degree of common ownership of firms in the same market affects consumption and investment. Such an increase is shown to reduce real investment and therefore intertemporal consumption. Overall, institutional investors’ common ownership of firms competing in the same market serves as a device for weakening market competition. The resulting increase in the price of acquiring shares with institutional investors then crowds out savings directed to real investments.

Keywords: Common ownership; Institutional investors; Real versus financial investments; Market power; Savings and investments; Investment crowding-out; Overlapping generations. (search for similar items in EconPapers)
JEL-codes: G11 G23 L13 L41 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:62:y:2019:i:c:s0164070419301983

DOI: 10.1016/j.jmacro.2019.103155

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