Common Ownership, Creative Destruction, and Inequality : Evidence from U.S. Consumers

Using granular data from the consumer goods industry, we study pricing and non-pricing effects of common ownership at the product level. We find positive elasticity of consumer goods prices to common ownership and that firms pass along price increases to consumers through the marginal cost channel. Our results are robust to using Bartik-like shifters for market shares and variations in common ownership driven by financial mergers. We present the first large-scale systematic evidence on the relationship between common ownership and creative destruction at the product level. Our results show that common owners introduce new products at a faster rate and discontinue existing product items at a similar pace compared to control firms, resulting in greater net variety. Finally, we provide new insights in that the rate of increase in consumer goods prices is higher in product modules catering to lower-income households, whereas consumers in high-income segments benefit more from the increase in product variety due to higher common ownership. These results deliver important parameters to highlight the contrasting effects of increased common ownership on consumer segments across income distribution