Working Paper: NBER ID: w30785
Authors: Miguel Anton; Florian Ederer; Mireia Gine; Martin C. Schmalz
Abstract: We present a mechanism based on managerial incentives through which common ownership affects product market outcomes. Firm-level variation in common ownership causes variation in managerial incentives and productivity across firms, which leads to intra-industry and intra-firm cross-market variation in prices, output, markups, and market shares that is consistent with empirical evidence. The organizational structure of multiproduct firms and the passivity of common owners determine whether higher prices under common ownership result from higher costs or from higher markups. Using panel regressions and a difference-in-differences design we document that managerial incentives are less performance-sensitive in firms with more common ownership.
Keywords: common ownership; competition; managerial incentives; antitrust; product market outcomes
JEL Codes: D21; G32; J33; L13; L21; M12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Common Ownership (G32) | Less Performance-Sensitive Managerial Incentives (D29) |
| Less Performance-Sensitive Managerial Incentives (D29) | Higher Prices and Markups (D49) |
| Common Ownership (G32) | Higher Prices and Markups (D49) |