Non-monotonic entry dynamics in oligopoly with common ownership

Domenico DeGiovanni (), Richard R. Ruble () and Dimitrios Zormpas ()
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Domenico DeGiovanni: Aarhus University School of Business and Social Sciences; Universita degli Studi della Calabria
Richard R. Ruble: EM Lyon (Ecole de Management de Lyon)
Dimitrios Zormpas: University of Macedonia Department of Economics

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: We show how common ownership fundamentally transforms entry in an uncertain market from sequential preemption into a regime of coordination with contest-like dynamics. We do this by studying an industry with three firms facing a stochastically evolving demand that internalize the effect of their entry and output decisions on rivals. Equilibrium exhibits an accordion effect with respect to internalization: common ownership softens the last entry, intensifies competition at the duopoly stage, and ultimately slows down first market entry, reducing overall dynamism. But unlike in two-firm industries, a coordination equilibrium emerges at the duopoly stage if option value is high enough. The contest-like dynamics in this equilibrium accelerate first entry and raise welfare.

Keywords: accordion effect; business dynamism; common ownership; investment underuncertainty; preemption games; real options (search for similar items in EconPapers)
JEL-codes: D25 G32 L13 (search for similar items in EconPapers)
Date: 2026-11, Revised 2026-11
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