Antitrust for Institutional Investors

Rock, Edward B.; Rubinfeld, Daniel L.

doi:10.2139/ssrn.2998296

“…For both small and large spillovers this author …nds that cooperativeness in the pricing stage is generally higher when subjects can make binding R&D agreements than in the baseline treatments without the possibility of such agreements. 70 Goeree and Helland (2010) gather a number of cases in the petroleum industry, the computer industry, the market for semiconductor memory, and the telecommunications sector. 71 Besanko and Spulber (1989) show that, if collusive behavior is unobservable and if production costs are private information, then the antitrust authority may optimally induce some intermediate degree of collusion among …rms.…”

Section: Discussionmentioning

confidence: 99%

“…68 There is also growing evidence that R&D cooperation facilitates product market cooperation from empirical studies (Duso et al 2014; Goeree and Helland 2010), from experiments (Suetens 2008), 69 and from antitrust cases. 70 There is also recent evidence that price and product space collusion may go together (Sullivan 2016).…”

Section: Randd and Output Cooperationmentioning

confidence: 99%

Overlapping Ownership, R&D Spillovers, and Antitrust Policy

López¹,

Vives²

2019

Journal of Political Economy

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This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with overlapping ownership. We show that overlapping ownership leads to internalization of rivals. profits by firms and find that, for demand not too convex, increases in overlapping ownership increase (decrease) R&D and output for high (low) enough spillovers while it increases R&D but decreases output for intermediate levels of spillovers. There is scope for overlapping ownership to improve welfare provided that spillovers are sufficiently large. The socially optimal degree of overlapping ownership increases with the number of firms, with the elasticity of demand and of the innovation function, and with the extent of spillover effects. In terms of consumer surplus standard, the desirability of overlapping ownership is greatly reduced even under low market concentration. When R&D has commitment value and spillovers are high the optimal extent of overlapping ownership is higher. The results obtained are robust in the context of a Bertrand oligopoly model with product differentiation.

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“…Baker (2016) offers a "qualified agreement" with Professor Elhauge's assessment. Scott Morton & Hovenkamp (2017) likewise argue that patterns and effects of common ownership can be a violation of existing antitrust laws, but offer a more focused guidance on how suits may be organized in the U.S.. A vivid theoretical debate continues in the law journals (see, e.g., Patel (2017); Rock & Rubinfeld (2018); Ginsburg & Klovers (2018)). Elhauge (2017a) offers a review.…”

Section: Legal Aspectsmentioning

confidence: 99%

Common-Ownership Concentration and Corporate Conduct

Schmalz

¹

2018

Annu. Rev. Financ. Econ.

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The question of whether and how partial common-ownership links between strategically interacting firms affect firm objectives and behavior has been the subject of theoretical inquiry for decades. Since then, the growth of intermediated asset management and consolidation in the asset management sector has led to more pronounced common-ownership links at the level at which corporate control is exercised. Recent empirical research has provided evidence consistent with the literature's prediction that common-ownership concentration (CoOCo) can affect product market outcomes. The resulting antitrust concerns have received worldwide attention. However, because CoOCo can change the objective function of a firm, the potential implications span all fields of economics that involve corporate conduct, including corporate governance, strategy, industrial organization, and financial economics. This article connects the papers establishing the theoretical foundations, reviews the empirical and legal literatures, and discusses challenges and opportunities for future research.

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“…68 There is also growing evidence that R&D cooperation facilitates product market cooperation from empirical studies (Duso et al 2014;Goeree and Helland 2010), from experiments (Suetens 2008), 69 and from antitrust cases. 70 There is also recent evidence that price and product space collusion may go together (Sullivan 2016).…”

Section: Randd and Output Cooperationmentioning

confidence: 99%

“…Second-order, stability and regularity conditions. We …rst check the stability and regularity conditions; using (65) and (70) and from Table B3 we obtain Second order conditions are: (i) @ p i p i i < 0; (ii) @ x i x i i < 0; and (iii) @ p i p i i (@ x i x i i ) (@ p i x i i ) 2 > 0. Conditions (i) and (ii) are satis…ed:…”

Section: Threshold Valuementioning

confidence: 99%

Overlapping Ownership, R&D Spillovers, and Antitrust Policy

López

¹

,

Vives

²

2017

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This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with overlapping ownership. We show that overlapping ownership leads to internalization of rivals. profits by firms and find that, for demand not too convex, increases in overlapping ownership increase (decrease) R&D and output for high (low) enough spillovers while it increases R&D but decreases output for intermediate levels of spillovers. There is scope for overlapping ownership to improve welfare provided that spillovers are sufficiently large. The socially optimal degree of overlapping ownership increases with the number of firms, with the elasticity of demand and of the innovation function, and with the extent of spillover effects. In terms of consumer surplus standard, the desirability of overlapping ownership is greatly reduced even under low market concentration. When R&D has commitment value and spillovers are high the optimal extent of overlapping ownership is higher. The results obtained are robust in the context of a Bertrand oligopoly model with product differentiation. JEL-Codes: D430, L130, O320. We thank Ramon Faulí-Oller for his insightful initial contributions and to the editor and three anonymous referees for very useful suggestions. For helpful comments we thank Isabel Busom, Luis Cabral,

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Antitrust for Institutional Investors

Cited by 17 publications

References 5 publications

Overlapping Ownership, R&D Spillovers, and Antitrust Policy

Overlapping Ownership, R&D Spillovers, and Antitrust Policy

Common-Ownership Concentration and Corporate Conduct

Overlapping Ownership, R&D Spillovers, and Antitrust Policy

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