Common Ownership and Collusion

This paper investigates the relationship between overlapping ownership and cartel participation, addressing a critical gap in the literature. While prior studies have focused predominantly on the unilateral effects of common ownership on market outcomes, little is known about its potential role in facilitating or hindering explicit collusion. Leveraging a unique dataset comprising a population of legal cartels in Sweden (1946-1993), we are able to overcome the usual issue of sample selection bias. We show that larger profit weights-reflecting greater ownership stakes-are not only associated with, but also Granger-cause collusion and help stabilize agreements. In particular, firms reduce their profit weights immediately following a cartel dissolution. We further analyze the evolution of common ownership networks over time, as cartels transition from legal to illegal in 1993, shedding new light on how ownership structures may influence collusion.