Finance

Physics

Product market

Business

Market share

Biology

Epistemology

Macroeconomics

Philosophy

Empirical evidence

Econometrics

Market structure

Economics

Microeconomics

Common ownership

Ecology

Productivity

Variation (astronomy)

Incentive

Market competition

Astrophysics

Monetary economics

Market economy

Industrial organization

Panel data

Competition (biology)

Journal of Political Economy

We present a mechanism based on managerial incentives through which common ownership affects product market outcomes. Firm-level variation in common ownership causes variation in managerial incentives and productivity across firms, which leads to intraindustry and intrafirm cross-market variation in prices, output, markups, and market shares that is consistent with empirical evidence. The organizational structure of multiproduct firms and the passivity of common owners determine whether higher prices under common ownership result from higher costs or from higher markups. Using panel regressions and a difference-in-differences design, we document that managerial incentives are less performance sensitive in firms with more common ownership.

Common Ownership, Competition, and Top Management Incentives