Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215412 
Year of Publication: 
2020
Series/Report no.: 
University of Tübingen Working Papers in Business and Economics No. 133
Publisher: 
University of Tübingen, Faculty of Economics and Social Sciences, Tübingen
Abstract: 
We study oligopolistic competition in product markets where the firms' quantity decisions are delegated to managers. Some firms are commonly owned by shareholders such as index funds whereas the other firms are owned by independent shareholders. Under such an asymmetric ownership structure, the common owners have an incentive to coordinate when designing the manager compensation schemes. This implicit collusion induces a less aggressive output behavior by the coordinated firms and a more aggressive behavior by the noncoordinated firms. The profits of the noncoordinated firms are increasing in the number of coordinated firms. The profits of the coordinated firms exceed the profits without coordination if at least 80 % of the firms are commonly owned - an astonishing resemblance to the merger literature.
Subjects: 
Common ownership
index funds
shareholder coordination
manager com-pensation
JEL: 
G32
L22
M52
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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