Fuel diversification among firms and common ownership

Yi Liu and Toshihiro Matsumura

MPRA Paper from University Library of Munich, Germany

Abstract: We develop a duopoly model that incorporates fuel diversification, resulting in ex post cost asymmetry between firms. We theoretically examine how common ownership influences welfare. Our findings indicate that welfare decreases (increases) with the degree of common ownership when ex post cost heterogeneity due to fuel diversification is small (large). Furthermore, we identify a potential U-shaped relationship between the degree of common ownership and welfare, an insight not previously documented in the literature. In addition, we demonstrate that common ownership promotes fuel diversification, which may further enhance welfare.

Keywords: overlapping ownership; welfare-improving production substitution; cost asymmetry; fuel choices (search for similar items in EconPapers)
JEL-codes: G23 L13 Q42 (search for similar items in EconPapers)
Date: 2025-08-14
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:125747

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