We investigate the incentives of a high-quality firm to transfer for free its proprietary product innovation technology to its standard-quality rival on which it has passive partial ownership holdings (PPOs). We identify the conditions under which there exists a non-controlling share to make...

We characterize the effect of overlapping ownership (OO) on investments in product innovation. We analyze two opposing forces: (1) OO induces firms to internalize that success on their own behalf erodes the rivals’ business, reducing investments; (2) OO softens competition in the product...