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| Keita Kamei |
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| ''Common ownership and entry with dominant firms and a competitive fringe'' |
| ( 2026, Vol. 46 No.1 ) |
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| This note studies common ownership in an industry with a finite set of dominant quantity-setting firms and an endogenous competitive fringe with free entry under monopolistic competition. Common ownership among dominant firms is summarized by a reduced-form profit-internalization parameter that captures the extent to which managers internalize rivals' profits. Stronger internalization softens competition, lowers dominant-firm output, and induces additional entry of fringe varieties. Embedding this mechanism in a general equilibrium economy with separate workers and owners, where only owners receive firm profits, delivers a simple welfare benchmark. Under free entry, constant-elasticity-of-substitution demand, and Cobb-Douglas expenditure shares, stronger internalization raises the differentiated-goods price index and reduces owners' nominal income, implying that both groups' indirect utilities fall. Consequently, policies that reduce within-industry profit internalization are Pareto improving in this benchmark. |
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| Keywords: common ownership, competitive fringe, free entry, general equilibrium, Cournot competition, monopolistic competition, market structure |
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
L4 - Antitrust Issues and Policies: General |
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| Manuscript Received : Jan 03 2026 | | Manuscript Accepted : Mar 30 2026 |
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