We characterize the effect of overlapping ownership (OO) on investments in product
innovation. We analyze two opposing forces: (1) OO induces firms to internalize that success
on their own behalf erodes the rivals’ business, reducing investments; (2) OO softens
competition in the product market, enhancing investments. These forces also determine
potential shifts between the stable symmetric investment equilibrium and asymmetric
equilibria. We characterize circumstances such that the competition-softening effect, by
stimulating investments, can induce OO to raise total welfare. We also study how an incumbent
technology affects the threshold required for OO to possibly stimulate investments in
innovation.
Zoom link: https://zoom.us/j/97374751400?pwd=UjZ4cUVaSXZ2bnZUT1BNSVhySFlDQT09
