July 10, 2020

Brown Bag Seminar Cluster Industrial Economics

Identifying the profit weights of Common Ownership in the US non-alcoholic Beverage Industry

Date

July 10, 2020
14:30 - 15:00

Location

Online seminar via Webex

Speaker

Christina Stadler

This is an online seminar using Webex. You will receive the login data with the invitation to the talk.

Abstract:   Common ownership – the horizontal shareholdings of the same institutional investors in at least two firms of an industry- is an increasing global phenomenon. It is a hot topic in industrial organization and competition policy. The Common Ownership Hypothesis assumes that a manager puts a nonzero weight on profits of product-market rivals in which his shareholders are simultaneously invested. The aim of this project is to analyse whether (and to what extent) a shock in common ownership has an effect on the competitive environment in the US non-alcoholic beverage industry. This aim translates into the research question: How do profit weights that managers put on competing companies under the Common Ownership Hypothesis change after an exogenous shock in common ownership? The project understands a share’s addition to a to a globally renowned stock market index as an exogenous shock in common ownership. The US soft drink industry is a well-suited candidate for the research question: There are three events of index entry which arguably change common ownership. The presence of common ownership is predominant. The project will use a structural empirical approach to identify the change in profits weights. Whereas literature computes profits weights based on several assumptions, this project will be the first to identify the changes in profit weights caused by these shocks in common ownership. This project will provide important insights for the current debate in academia and policy.

Speaker

Christina Stadler, DIW Berlin