Downstream cross-holdings and upstream R&D: A comment

Jin, Yake; Mukherjee, Arijit; Zeng, Chenhang

Abstract

According to Hu et al. [Journal of Industrial Economics, 70(3), pp. 775–789], downstream cross-holdings are permissible based on the social welfare standard if the investment technology in the upstream sector is highly inefficient. However, the conclusion of that paper relies on a definition of downstream producer surplus that is not so commonly found in the literature. After using a more commonly found definition of downstream producer surplus, this note demonstrates that downstream cross-holdings have detrimental impacts on both consumer surplus and social welfare, emphasizing the need for efficient and effective regulations on downstream cross-holdings in Hu et al. [Journal of Industrial Economics, 70(3), pp. 775–789] type economy.

Citation

Jin, Y., Mukherjee, A., & Zeng, C. (2024). Downstream cross-holdings and upstream R&D: A comment. Journal of Industrial Economics, https://doi.org/10.1111/joie.12391

• Journal Article Type: Article
• Acceptance Date: Mar 8, 2024
• Online Publication Date: Mar 27, 2024
• Publication Date: Mar 27, 2024
• Deposit Date: Mar 22, 2024
• Publicly Available Date: Mar 28, 2026
• Journal: Journal of Industrial Economics
• Print ISSN: 0022-1821
• Electronic ISSN: 1467-6451
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1111/joie.12391
• Keywords: cross-holdings; incentive; welfare effect; competition policy
• Public URL: https://nottingham-repository.worktribe.com/output/32751898
• Publisher URL: https://onlinelibrary.wiley.com/doi/10.1111/joie.12391
• Additional Information: This is the peer reviewed version of the following article: Jin, Y., Mukherjee, A. and Zeng, C. (2024), Downstream Cross-Holdings and Upstream R&D: A Comment†. J Ind Econ., which has been published in final form at https://doi.org/10.1111/joie.12391. The article must be linked to Wiley’s version of record on Wiley Online Library