I study the effects of minority equity ownership by firms in their trade partners. Passive ownership promotes relationship-specific investments by both parties and increases the joint surplus. The relative attractiveness of partial backward vs. forward ownership depends on the specific nature of...

We demonstrate how the incentives of firms that partially own their suppliers or customers to foreclose rivals depend on how the partial owner can extract profits from the target. Compared to a fully vertically integrated firm, a partial owner may obtain only a share of the target's profit but...

When a monopolist sells an input to an oligopoly, consumer and total surplus frequently are invariant to changes in passive ownership of the monopolist by downstream firms. Within broad classes of ownership profiles, strong invariance holds: the input and output choices of downstream firms are...

We study the incentives of firms that hold partial vertical ownership to foreclose rivals. Compared to a full vertical merger, with partial ownership, a firm may obtain only part of the target's profit but may nevertheless be able to influence the target's strategy significantly. The target may...