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YINS Seminar: Florian Ederer

Weekly Seminar
Event time: 
Wednesday, November 30, 2022 - 12:00pm
Yale Institute for Network Science See map
17 Hillhouse Avenue, 3rd floor
New Haven, CT 06824
Event description: 

YINS Seminar

“A Tale of Two Networks: Common Ownership and Product Market Rivalry”

Speaker: Florian Ederer
Associate Professor of Economics, Yale School of Management
Abstract: We study the welfare implications of the rise of common ownership in the United States from 1994 to 2018. We build a general equilibrium model with a hedonic demand system in which firms compete in a network game of oligopoly. Firms are connected through two large networks: the first reflects ownership overlap, the second product market rivalry. In our model, common ownership of competing firms induces unilateral incentives to soften competition. The magnitude of the common ownership effect depends on how much the two networks overlap. We estimate our model for the universe of U.S. public corporations using a combination of firm financials, investor holdings, and text-based product similarity data. We perform counterfactual calculations to evaluate how the efficiency and the distributional impact of common ownership have evolved over time. According to our baseline estimates the welfare cost of common ownership, measured as the ratio of deadweight loss to total surplus, has increased nearly tenfold (from 0.3% to over 4%) between 1994 and 2018. Under alternative assumptions about governance, the deadweight loss ranges between 1.9% and 4.4% of total surplus in 2018. The rise of common ownership has also resulted in a significant reallocation of surplus from consumers to producers.
Speaker Bio: Florian Ederer is an Associate Professor of Economics at the Yale School of Management, a Research Staff Member at the Cowles Foundation for Research in Economics, and an NBER faculty research fellow. Professor Ederer’s research, which has been widely published in leading journals, is in the areas of organizational economics, innovation, and antitrust. Some of his recent work explores the impact of networks of common ownership on managerial compensation and product market competition and the existence and pervasiveness of “killer acquisitions” that prevent startups from challenging dominant market incumbents. In his academic work he draws on a broad set of tools often combining theoretical models, experimental methods, and empirical analysis. Prior to joining the Yale School of Management Professor Ederer was a faculty member of the UCLA Anderson School of Management. He earned his doctorate in economics at the Massachusetts Institute for Technology and his master’s and undergraduate degrees from the University of Oxford.

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