Overlapping ownership and product innovation

Rune Stenbacka and Geert Van Moer

International Journal of Industrial Organization, 2023, vol. 89, issue C

Abstract: We characterize the effect of overlapping ownership (OO) on investments in drastic product innovation. The success probability of innovation increases with investment. We analyse two opposing forces: (1) OO induces firms to internalize that success on their own behalf erodes the rivals’ business, reducing investments; (2) OO softens competition in the product market, enhancing investments. Our analysis reveals that the competition-softening effect, by stimulating investments, can induce OO to benefit consumers, in particular when the R&D projects are complex. We also show that an incumbent technology raises the threshold required for OO to stimulate investments in innovation.

Keywords: Common ownership; Cross-ownership; Product innovation; Competition (search for similar items in EconPapers)
JEL-codes: D43 L13 O32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718723000619
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:89:y:2023:i:c:s0167718723000619

DOI: 10.1016/j.ijindorg.2023.102980

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().