Endogenous Choice of Stakes Under Common Ownership

We present a simple model of common ownership in which an investor chooses its stake competing firms light the effects on firm behavior and profits. Two compete Cournot duopoly, affects firm’s objective function manner posited by Bresnahan & Salop (1986) O’Brien (2000). show that with equal stakes both firms—a so‐called concentrated owner (CCO)—places greater value additional share firm, compared to atomistic owners. The same is true noncommon (NCO) just one firm. Both CCO NCOs thus have incentives acquire any shares held owners. Our yields two testable empirical predictions. First, equilibrium structure noncompetitive industries should be systematically more than competitive industries. Second, within investment portfolio institutional investors, holdings