Is Business Broken?
How to Combat Common Ownership
Apr 10, 2025
Join Fiona Scott Morton, a leading economist from Yale, Glen Weyl, founder of the RadicalxChange Foundation, and Florian Ederer, a market policy expert from BU, as they tackle the challenges of common ownership. They discuss how major investors shape competition, raise prices, and stifle innovation. The trio explores innovative solutions, critiques existing regulations, and emphasizes the need for shareholder voting reforms. They also confront political barriers in financial regulation, aiming for clearer ownership structures to benefit consumers.
36:52
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Quick takeaways
- Experts propose limiting institutional ownership stakes in competing firms to 1% to reduce anti-competitive effects while ensuring investor diversification.
- Altering shareholder voting rights of large institutional investors could mitigate conflicts of interest and influence on corporate governance, but raises legitimacy concerns.
Deep dives
Understanding Common Ownership
Common ownership occurs when major investors acquire substantial stakes in competing firms, leading to reduced competition, increased prices, and stifled innovation. Economists are now challenged to identify solutions that counteract these anti-competitive effects without hampering investment. This complex issue has previously been overlooked or considered unsolvable; however, experts like Glenn Weil and Fiona Scott Morton emphasize the need for innovative thinking to address the systemic nature of the problem. It is critical to explore and discuss various policy options and corporate governance changes that can mitigate the impacts of common ownership.
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