The Journal of Finance· 2018Q1
Anticompetitive Effects of Common Ownership
- 944citations
- Q1SCImago
- 2018year
Short summary
Common ownership by large institutional investors in the U.S. airline industry increases market concentration 10x more than antitrust authorities assume, leading to higher ticket prices.
AI-generated from the title and abstract; the full text is not read.
Key points
- Common ownership by large investors significantly increases market concentration in the U.S. airline industry (10x larger than standard measures).
- Increased common ownership concentration on routes correlates with higher ticket prices.
- The effect persists even when isolating ownership changes from specific large asset managers.
- Common ownership imposes a social cost by reducing product market competition.
AI-generated from the title and abstract; the full text is not read.
Abstract
ABSTRACT Many natural competitors are jointly held by a small set of large institutional investors. In the U.S. airline industry, taking common ownership into account implies increases in market concentration that are 10 times larger than what is “presumed likely to enhance market power” by antitrust authorities. Within‐route changes in common ownership concentration robustly correlate with route‐level changes in ticket prices, even when we only use variation in ownership due to the combination of two large asset managers. We conclude that a hidden social cost—reduced product market competition—accompanies the private benefits of diversification and good governance.
The authors' abstract, as published at the source. The Journal of Finance, 2018 · DOI ↗
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Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance