Partial Ownership Arrangements and the Potential for Collusion

Reitman, David

doi:10.2307/2950573

Cited by 101 publications

(79 citation statements)

References 7 publications

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“…Flath (1991) shows that in Cournot industries it would not be rational for a firm to acquire partial equity interests in rivals, while it may be rational for a firm in a Bertrand duopoly to acquire a silent interest in the other. Similar results are obtained in Reitman (1994). The essential point is how aggressive the remaining participants in the market respond to an increasing degree of cross ownership.…”

Section: Partial Ownership and Supply Decisionssupporting

confidence: 74%

Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?

Amundsen¹,

Bergman²

2002

The Energy Journal

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The integration of the power markets in Norway and Sweden in 1996 significantly constrained the major power companies' ability to exercise market power within their national borders. In recent years, however, mergers and reciprocal acquisition of shares have reduced the number of independent players on the Norwegian-Swedish power market. i'be aim of this paper is to explore to what extent increasing cross-ownership among the major power companies in Norway and Sweden might re-establish the market power that was lost when the two national power markets were integrated. The analysis is based on a numerical model, assuming Cournot quantity setting behavior, of the Norwegian-Swedish power market, The simulation results suggest that partial ownership relations between generators tend to increase horizontal market power and thus the market price of electricity.

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Section: Partial Ownership and Supply Decisionssupporting

confidence: 74%

Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?

Amundsen¹,

Bergman²

2002

The Energy Journal

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“…Much less stringent conditions under which merging firms benefit from the market power they create can be found in different contributions including Perry and Porter (1985) or Deneckere and Davidson (1985). Reitman (1994) has extended this result to partial ownership arrangements: if the industry's overall profit increases following a partial acquisition, the beneficiaries are the rival companies which benefit from a positive externality (increase in prices) whereas the firms involved in the transaction lose, which removes any incentive. Similarly, Farrell and Shapiro (1990) show that a marginal increase in an initial toehold is profitable only when a cost reduction compensates the negative effect of a less aggressive behavior of the companies involved (production restriction) and may be socially desirable in that case.…”

Section: Introductionmentioning

confidence: 99%

Incentives for Partial Acquisitions and Real Market Concentration

Charléty¹,

Fagart²,

Souam³

2009

JITE

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We analyze the incentives of a controlling shareholder of a firm to acquire, directly or indirectly through his firm, shares in a competitor. We charaterize the conditions under which these partial acquisitions are profitable for this dominant shareholder as well as the equilibrium toehold and its nature: controlling or silent. We find that while this shareholder gains, the acquisition is detrimental to minority shareholders of his firm, or of the target, or even of both. We show that the incentives are enhanced if the dominant shareholder initially holds silent stakes in rivals while controlling interests may discourage them. Moreover, we find that partial acquisitions always lead to a decrease in the joint profit of the two firms involved, and an increase in competitors's profits as the market becomes less competitive.

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“…37 In particular: for = 0:62, the equilibrium is in R III when > 0:41 (see Figure 6a). Here the strategic e¤ect is positive since~ ( ) > 0:62 for > 0:24.…”

Section: Simulationsmentioning

confidence: 99%

Cross-Ownership, R&D Spillovers, and Antitrust Policy

López

Vives

2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Cross-ownership, R&D Spillovers, and Antitrust Policy Abstract This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with minority shareholdings. We find that, with high market concentration and sufficiently convex demand, there is no scope for cross-ownership to improve welfare regardless of spillover levels. Otherwise, there is scope for cross-ownership provided that spillovers are sufficiently large. The socially optimal degree of cross-ownership increases with the number of firms, with the elasticity of demand and of the innovation function, and with the extent of spillover effects. In terms of consumer surplus standard, the scope for cross-ownership is greatly reduced even under low market concentration. Terms of use: Documents in EconStor mayJEL-Codes: D430, L130, O320.

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Partial Ownership Arrangements and the Potential for Collusion

Cited by 101 publications

References 7 publications

Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?

Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?

Incentives for Partial Acquisitions and Real Market Concentration

Cross-Ownership, R&D Spillovers, and Antitrust Policy

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