Partial horizontal and vertical ownership

Jean-Philippe Serbera

Applied Economics Letters, 2011, vol. 18, issue 6, 531-537

Abstract: Others have shown that in vertically related Cournot oligopolies, partial ownership could have no real effects on total output or price choice, and in a separate way that increasing cross-ownership among rivals leads to more collusive outcome. In a complementary manner we study the interactions between vertical and horizontal partial ownership giving no control over target. This article shows that when the choice of optimal cross-ownership profile is simultaneous, a mixed equilibrium with upward vertical and horizontal participations can be achieved, vertical and horizontal ones being strategic substitutes. We finally exhibit the significant influence of vertical shareholdings on output price as on profits and on consumer surplus, which in our model is harmful at optimum from a consumer and a social point of view.

Date: 2011
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DOI: 10.1080/13504851003761772

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