Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/236318 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14287
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We provide the first estimates of the extent of common ownership of competing firms in Australia. Combining data on market shares and substantial shareholdings, we calculate the impact of common ownership on effective market concentration. Among firms where we can identify at least one owner, 31 percent share a substantial owner with a rival company. Analysing 443 industries, we identify 49 that exhibit common ownership, including commercial banking, explosives manufacturing, fuel retailing, insurance and iron ore mining. Across the Australian economy, common ownership increases effective market concentration by 21 percent. Our estimates imply that if listed firms seek to maximise the value of their investors' portfolios, then they place the same value on $3.70 of their competitors' profits as on $1 of their own profits. We discuss the limitations of the available data, and the potential implications of common ownership for competition in Australia.
Subjects: 
horizontal shareholding
market concentration
Herfindahl-Hirschman Index
Modified Herfindahl-Hirschman Index
antitrust
competition
JEL: 
L11
L12
D42
D43
Document Type: 
Working Paper

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