An OLG Model of Common Ownership: Effects on Consumption and Investments

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Abstract

We analyze how an increase in the degree of common ownership of firms in the same market affects consumption and investment. Such an increase is shown to reduce real investment and therefore intertemporal consumption. Overall, institutional investors’ common ownership of firms competing in the same market serves as a device for weakening market competition. The resulting increase in the price of acquiring shares with institutional investors then crowds out savings directed to real investments.
Original languageEnglish
Peer-reviewed scientific journalJournal of Macroeconomics
Volume62
ISSN0164-0704
DOIs
Publication statusPublished - 23.08.2019
MoE publication typeA1 Journal article - refereed

Keywords

  • 511 Economics
  • Common ownership
  • institutional investors
  • real versus financial investments
  • market power
  • savings and investments
  • investment crowding-out
  • overlapping generations

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