This study evaluates the effects of institutional investors' common ownership of firms competing in the same market. Overall, common ownership has two opposing effects: (a) it serves as a device for weakening market competition, and (b) it induces diversification, thereby reducing portfolio risk. We conduct a detailed welfare analysis within which the competition-softening effects of an increased degree of common ownership is weighted against the associated diversification benefits.
CITATION STYLE
Shy, O., & Stenbacka, R. (2020). Common ownership, institutional investors, and welfare. Journal of Economics and Management Strategy, 29(3), 706–723. https://doi.org/10.1111/jems.12380
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