Input Prices and Downstream Overlapping Ownership

A key issue in antitrust economics is how overlapping ownership affects firm behavior and consumer welfare. This paper studies how horizontal ownership among downstream firms affects the input prices set by an upstream supplier. Using a general consumer demand function, I provide precise conditions on demand primitives for when downstream ownership raises, reduces, or has no effect on input prices. The key factor is shown to be how demand curvature varies with total output. When horizontal ownership lowers input prices, the price reduction is in turn passed on to consumers, which mitigates the standard anti-competitive effect in the output market