Ownership and control in a competitive industry

Karle, Heiko ; Klein, Tobias J. ; Stahl, Konrad

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URL: https://ub-madoc.bib.uni-mannheim.de/29939
URN: urn:nbn:de:bsz:180-madoc-299394
Document Type: Working paper
Year of publication: 2011
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: L13 , L41,
Subject headings (SWD): Investition , Produktdifferenzierung , Corporate Governance , Unvollkommener Markt , Theorie
Keywords (English): Differentiated products , separation of ownership and control , private benefits of control
Abstract: We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a noncontrolling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se.

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