Common ownership and consumer welfare

Abstract Rival firms with shared institutional investors (i.e., common owners) may compete less aggressively, potentially harming consumer welfare. Yet, research on common ownership has primarily focused on firm performance, often overlooking welfare outcomes or revealing contradictory results. This paper adopts a strategic network perspective to examine how common ownership affects firms’ service quality and pricing levels, which directly impact consumer welfare, and how customer and competitor factors that alter the focus of competitive strategy moderate these effects. To test the hypotheses, the authors analyze a rich, multi-market dataset of U.S. airline firms from 1995 to 2025. Findings reveal that competing firms with higher common ownership tend to have lower service quality and set higher prices. However, this effect is attenuated for firms with high customer-asset value and amplified among rivals competing across multiple markets. The findings demonstrate common ownership’s influence on firms’ marketing mix strategies and offer actionable insights for managers, policymakers, and investors.