Common Ownership: Divergence and Convergence between Research and the Public Policy Debate

By Martin Schmalz – 

A significant gap persists between the economic literature on common ownership and the legal and public-policy discussion of the associated antitrust problem. To illustrate this gap and ways to bridge it, this note offers examples of contributions to the debate that deviate from what is known in the literature. Contrary to much of the commentary, the recent debate was not triggered by new theories but rather by new empirical evidence, provided by more than two dozen studies. These empirical studies don’t assume anticompetitive effects but they formally reject the assumption that there are no competitive effects of common ownership. Further, there is no empirical study to date that reject that there are at least some competitive effects of common ownership, and provides support for the idea of going back to the old paradigm in which firms maximize their profits, irrespective of their shareholders’ economic interests.

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