Cross-participated firms and welfare

Luciano Fanti

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: The present study analyses the effects on social welfare of the existence of cross-participation at ownership level in a Cournot duopoly. We show that crossparticipation, despite it lowers the degree of competition by reducing total output and consumer surplus, may increases social welfare, provided that i) the firm owned by a single shareholder is less efficient than the other (cross-participated) firm; ii) the size of the market is neither too large nor too small. Therefore, the policy implication is that larger cross-participations at ownership level should be favoured, despite their anticompetitive nature, when the cross-participated firm is more efficient and the extent of the market is not too large.

Keywords: Cross-ownership; Duopoly; Social welfare. (search for similar items in EconPapers)
JEL-codes: D43 L13 L4 (search for similar items in EconPapers)
Date: 2011-01-11
Note: ISSN 2039-1854
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2011/127

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