Abstract

We consider a dynamic Cournot oligopoly where firms jointly exploit a productive asset (renewable resource) and a subset of firms engage in rival crossshareholdings. A Markov Perfect Nash Equilibrium of the game is constructed and used to analyze the impact of cross-ownership on the equilibrium production strategies, steady-state resource stocks, profitability of cross-ownership, and social welfare. We show that in the case of a productive asset, for any level of cross-ownership, there exists an interval of resource stock for which a symmetric cross-ownership can be profitable. This sharply contrasts with a static oligopoly, where cross-ownership is profitable only if the number of firms involved in crossownership is large enough. Moreover, cross-ownership can lead to an increase in market output and social welfare both in the short run and at the steady state.Thus, cases of cross-ownership in renewable resource industries warrant specific  consideration by antitrust authorities.

Co-authors : Hassan Benchekroun and Ilyass Dahmouni

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