Active Investors, Passive Investors, and Common Ownership
AEA Papers and Proceedings
vol. 110,
May 2020
(pp. 565-68)
Abstract
Recent studies have extensively examined the hypothesis that a higher degree of common ownership relaxes competition. This approach has typically conducted comparative statics analysis based on exogenously given rates of common ownership. This study constructs a simple model in which common ownership emerges as an equilibrium outcome resulting from ownership acquisition. We characterize the equilibrium incentives of institutional owners to acquire common ownership of the firms operating in a duopolistic product market. Further, we explore the effects of common ownership on passive investors, consumer welfare, and total welfare.Citation
Shy, Oz, and Rune Stenbacka. 2020. "Active Investors, Passive Investors, and Common Ownership." AEA Papers and Proceedings, 110: 565-68. DOI: 10.1257/pandp.20201028Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- G24 Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L13 Oligopoly and Other Imperfect Markets