Strategic capacity investment with common ownership or cross holdings

Richard Ruble and Dimitrios Zormpas

No 2201, Working Papers from University of Crete, Department of Economics

Abstract: We study how overlapping ownership affects the timing and size of capacity investments in duopoly. In addition to standard accommodation and delay strategies, internalization allows a leader to block follower entry. Follower timing and capacity reactions are less aggressive, making outcomes less competitive ex-post. Positional competition is more intense, and entry occurs earlier in equilibrium. Internalization raises a leader's incentive to delay follower entry rather than accommodate, and we show with an example that this strategic shift can benefit consumers.

Keywords: ownership; cross-ownership; dynamic competition; Stackelberg leadership; strategic capacity investment (search for similar items in EconPapers)
JEL-codes: D25 G32 L13 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2022-09-23
New Economics Papers: this item is included in nep-cfn, nep-com, nep-cta and nep-reg
References: Add references at CitEc
Citations:

Published

Downloads: (external link)
https://economics.soc.uoc.gr/wpa/docs/2201.pdf First version (application/pdf)
No

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:crt:wpaper:2201

Access Statistics for this paper

More papers in Working Papers from University of Crete, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Kostis Pigounakis ().