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Shorting Your Rivals: Negative Ownership as an Antitrust Remedy

Hemphill, C. Scott
; 
Ayres, Ian
; 
Wickelgren, Abraham L.
Keywords
Exclusive contracts; Short selling (Securities); Predatory pricing; Small business; Cartels; Stock ownership; Financial market reaction; Airline industry
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Faculty Scholarship Series
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Shorting Your Rivals_ Negative Ownership as an Antitrust Remedy.pdf
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Abstract
The article proposes a unique antitrust remedy of negative ownership positions in remaining rivals as an alternative to divestiture in mergers. This remedy aims to restore competition levels by counteracting anticompetitive effects of mergers through various implementations like compensation based on relative performance and derivative contracts. The text explores the concept of negative ownership in antitrust enforcement, discussing its benefits in maintaining pre-merger competitive incentives and potentially allowing procompetitive transactions. It also delves into scenarios of asymmetry among firms, impact on innovation, and a detailed model of the JetBlue/Spirit merger to illustrate how negative ownership can influence pricing decisions, offering a versatile tool for antitrust enforcement.
URI
http://hdl.handle.net/20.500.13051/18504