Vertical differentiation with overlapping ownership

Youping Li, Jianhu Zhang and Zipeng Zhou

Economics Letters, 2023, vol. 222, issue C

Abstract: Existing studies on the competitive effects of overlapping ownership usually take the products sold by the firms as given. This paper focuses on the firms’ incentive for product innovation in a vertically differentiated market. We find that overlapping ownership, while reducing the low-quality firm’s incentive to improve product quality, can raise the high-quality firm’s. The degree of vertical differentiation is higher, but consumer and social welfare may increase compared with the case of independent ownership.

Keywords: Overlapping ownership; Product innovation; Vertical differentiation; Welfare (search for similar items in EconPapers)
JEL-codes: G3 L1 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:222:y:2023:i:c:s0165176522004219

DOI: 10.1016/j.econlet.2022.110947

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