We investigate the relationship between common institutional ownership of firms in sectors along a supply chain and product market competition. Consistent with industrial organization models, common ownership is associated with lower markups in upstream and intermediate sectors and with higher markups in more downstream sectors. We establish causality by relying on a difference-in-differences approach based on the quasi-natural experiment of financial institution mergers. We conclude that common ownership deserves antitrust attention but eventual restrictions should be designed taking into account the overall portfolio composition of investors and jointly considering horizontal and vertical externalities that firms impose on each other.
Zoom link: https://zoom.us/j/97374751400?pwd=UjZ4cUVaSXZ2bnZUT1BNSVhySFlDQT09
