Overlapping Ownership, Sequential Moves and Welfare

Domenico DeGiovanni (), Richard R. Ruble () and Dimitrios Zormpas ()
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Domenico DeGiovanni: Aarhus University School of Business and Social Sciences; Universita degli Studi della Calabria
Richard R. Ruble: EM Lyon (Ecole de Management de Lyon)
Dimitrios Zormpas: University of Macedonia Department of Economics

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: We introduce overlapping ownership into a sequential move duopoly and find conditions where internalization has positive welfare effects in contrast with other standard oligopoly models. Internalization of rival profits softens follower output and entry decisions, inducing more aggressive leader behavior. In Stackelberg equilibrium follower internalization raises total output and welfare provided the follower is active. The effect is stronger if demand is more convex which makes the follower less responsive. In an entry deterrence setting, higher symmetric internalization that shifts equilibrium from accommodation to deterrence raises welfare relative to a benchmark with independent firms. Product differentiation attenuates the first effect but is necessary for the second effect if firms compete in prices.

Keywords: entry deterrence; overlapping ownership; Stackelberg (search for similar items in EconPapers)
JEL-codes: D25 G32 L13 (search for similar items in EconPapers)
Date: 2026-10, Revised 2026-10
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