Discussion paper

DP8277 Ownership and Control in a Competitive Industry

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 non-controlling 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.


Klein, T and H Karle (2011), ‘DP8277 Ownership and Control in a Competitive Industry‘, CEPR Discussion Paper No. 8277. CEPR Press, Paris & London. https://cepr.org/publications/dp8277