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Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry
Patrick Dennis
Kristopher S. Gerardi
Carola Schenone

Institutional investors often own significant equity in firms that compete in the same product market. These "common owners" may have an incentive to coordinate the actions of firms that would otherwise be competing rivals, leading to anti-competitive pricing. This paper uses data on airline ticket prices to test whether common owners induce anti-competitive pricing behavior. We find little evidence to support such a hypothesis, and show that the positive relationship between average ticket prices and a commonly used measure of common ownership previously documented in the literature is generated by the endogenous market share component, rather than the ownership component, of the measure.

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Patrick Dennis & Kristopher S. Gerardi & Carola Schenone, Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry, Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2019-15, 01 Jul 2019.
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Keywords: common ownership; airline prices; institutional ownership; competition
DOI: 10.29338/wp2019-15
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