Common Ownership in Production Networks

We characterize the firm-level welfare effects of a small change in ownership overlap, and how it depends on the position in the production network. The effect is heterogeneous depending on the position in the production network. In a horizontal economy, the firm for which a small change in ownership overlap is larger is the firm with larger markup. Instead, if there are vertical inter-firm relationships, the effect depends on the network position, and tends to be higher upstream. If a planner can affect ownership over-lap with some adjustment costs, the optimal intervention is proportional to the Bonacich centrality of each firm in the weighted network quantifying interfirm price-mediated externalities.