Essays on the Competitive Impact of Common Ownership

This thesis comprises three chapters on the competitive impact of common ownership. Chapter 1 is a survey of the literature which explains in detail the current approaches being taken, the methods being instigated, and the questions being asked. It explains that much of the current work in this area is overlooking the fundamental problems thwarting progress in our understanding of this topic and takes a vital step back to try and realign the questions being asked by this literature towards the fundamental issues in this topic. Ultimately, this chapter highlights that the most pressing issues are the lack of a theoretically grounded measure of common ownership which relates directly to a market outcome of interest, as well as a lack of variety in the data sources and economies being studied. Much of the literature has focussed on replicating a single dataset. Very few industries have been studied and evidence outside the US is lacking. The first of these issues is addressed in chapter 2 where we derive a theoretically grounded index for common ownership which directly relates the ownership matrix to output decisions by firms. We study this index under several assumptions and in a few special cases and provide theoretical evidence that common ownership can be anticompetitive. Next, chapter 3 addresses the other major gap in the literature identified and provides evidence on common ownership in three British industries: supermarkets, soft drinks and banking, over a 10-year period spanning 2011-2021. We analyse common ownerships impact on these industries using a variation of the index derived in chapter 2 and provide evidence that common ownership has reduced output in supermarkets and soft drinks, with the effect increasing in magnitude over the period, and remaining stable over the period, in the industries respectively. Evidence in banking is more mixed, but there is some evidence to support output may have been reduced by common ownership, but the trend is more unstable over the period