Free entry under common ownership

Abstract This study investigates the equilibrium and welfare properties of free entry under common ownership. We formulate a model in which incumbents under common ownership choose whether to enter a new market. Using a circular-market model, we find that an increase in common ownership reduces entries, which may or may not improve welfare. Welfare has an inverted-U shaped relationship with the degree of common ownership, which implies that there is a strictly positive optimal degree of common ownership.