We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a noncontrolling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se.
|Place of Publication||Tilburg|
|Publication status||Published - 2011|
|Name||TILEC Discussion Paper|
- Differentiated products
- separation of ownership and control
- private benefits
Karle, H., Klein, T. J., & Stahl, K. O. (2011). Ownership and Control in a Competitive Industry. (TILEC Discussion Paper; Vol. 2011-013). TILEC. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1767923