Overlapping ownership and product innovation

We characterize the effect of overlapping ownership (OO) on investments in drastic prod-uct innovation. The success probability of innovation increases with investment. We anal-yse 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 market, enhancing investments. Our analysis reveals that the competition-softening effect, by stimulating investments, can induce OO to benefit consumers, in par-ticular when the R & D projects are complex. We also show that an incumbent technology raises the threshold required for OO to stimulate investments in innovation. & COPY; 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY license ( http://creativecommons.org/licenses/by/4.0/ )