Ownership and Control in a Competitive Industry

Konrad Stahl, Tobias Klein and Heiko Karle

No 8277, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a non-controlling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se.

Keywords: Differentiated products; Private benefits of control; Separation of ownership and control (search for similar items in EconPapers)
JEL-codes: L13 L41 (search for similar items in EconPapers)
Date: 2011-02
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Citations: View citations in EconPapers (10)

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