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Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry

Patrick Dennis, Kristopher Gerardi and Carola Schenone

No 2019-15, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: Institutional investors often own significant equity in firms that compete in the same product market. These \"common owners\" may have an incentive to coordinate the actions of firms that would otherwise be competing rivals, leading to anti-competitive pricing. This paper uses data on airline ticket prices to test whether common owners induce anti-competitive pricing behavior. We find little evidence to support such a hypothesis, and show that the positive relationship between average ticket prices and a commonly used measure of common ownership previously documented in the literature is generated by the endogenous market share component, rather than the ownership component, of the measure.

Keywords: common ownership; airline prices; institutional ownership; competition (search for similar items in EconPapers)
JEL-codes: G33 G34 G38 L11 L41 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2019-07-01
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-com and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.29338/wp2019-15

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Handle: RePEc:fip:fedawp:2019-15