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The Competitive Effects of Common Ownership: We Know Less Than We Think

Daniel O'Brien and Keith Waehrer
February 23, 2017

Recent empirical research claims to show that common ownership by institutional investors harms competition even when all financial holdings are minority interests. This research has received a great deal of attention, leading to both calls for and actual changes in antitrust policy.

In this paper, Daniel O’Brien and Keith Waehrer examine the research and find that its conclusions regarding the effects of minority shareholdings on competition are not well established. They conclude that in order to draw policy conclusions, more rigorous empirical work is needed. They also suggest avenues for further research that would yield better-grounded findings about the relationship between price and common ownership than the research on the subject to date.