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 intraindustry and intrafirm 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.
Common Ownership, Competition, and Top Management Incentives
Miguel Antón,Florian Ederer,M. Giné,Martin C. Schmalz
Published 2016 in Journal of Political Economy
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- Publication year
2016
- Venue
Journal of Political Economy
- Publication date
2016-08-15
- Fields of study
Business, Economics
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