Cross ownership and divestment incentives

Rune Stenbacka; Geert Van Moer

doi:10.1016/j.econlet.2021.109748

Cross ownership and divestment incentives

Rune Stenbacka^*, Geert Van Moer

^*Corresponding author for this work

Economics, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

6 Citations (Scopus)

Abstract

Even though cross ownership raises industry profits, we demonstrate that it is prone to a commitment problem. Specifically, we show that producers in a Cournot duopoly have unilateral incentives to resell their minority share-holdings in the rival to outside investors, leading to an equilibrium with complete divestments. This feature challenges the stability of cross ownership configurations.

Original language	English
Article number	109748
Peer-reviewed scientific journal	Economics Letters
Volume	201
Number of pages	13
ISSN	0165-1765
DOIs	https://doi.org/10.1016/j.econlet.2021.109748
Publication status	Published - 12.02.2021
MoE publication type	A1 Journal article - refereed

Keywords

511 Economics
Cross ownership
Divestment incentives

Areas of Strength and Areas of High Potential (AoS and AoHP)

AoS: Competition economics and service strategy - Quantitative consumer behaviour and competition economics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.econlet.2021.109748

1-s2.0-S0165176521000252-mainFinal published version, 371 KBLicence: CC BY

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Cross ownership and divestment incentives

Abstract

Keywords

Areas of Strength and Areas of High Potential (AoS and AoHP)

UN SDGs

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