2017-11-27 07:39:00 Mon ET
stock market gold oil stock return s&p 500 asset market stabilization asset price fluctuations stocks bonds currencies commodities funds term spreads credit spreads fair value spreads asset investments
Is it anti-competitive and illegal for passive indexers and mutual funds to place large stock bets in specific industries with high market concentration? Harvard law professor Einer Elhauge suggests that it is illegal for a passive institutional investor to buy-and-hold large equity stakes in a less competitive industry with high concentration, such as the U.S. airlines industry with 4 or fewer key players. In contrast, passive indexers would be safe from antitrust concerns if most other institutional investors stop buying multiple public companies in a specific sector with high market concentration.
The basic rationale relates to the fact that if institutional investors such as index funds and mutual funds hold shares of multiple companies in a specific industry, these oligopolistic firms would tend to compete less vigorously with one another. When senior executives make business decisions in the best interests of their institutional investors, this logic suggests less fierce product market competition and greater price discrimination for consumers in addition to the private benefits of portfolio diversification. The net result would be more stable share prices and more favorable rents and returns to these passive indexers and mutual funds.
Although key critics may disagree with this novel thesis, it is quite controversial to judge whether it is legal for institutional investors to retain major equity stakes in oligopolistic firms in a given industry with high market concentration.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2019-07-07 18:36:00 Sunday ET

The Chinese central bank has to circumvent offshore imports-driven inflation due to Renminbi currency misalignment. Even though China keeps substantial fore
2025-06-20 08:27:00 Friday ET

President Trump poses new threats to Fed Chair monetary policy independence again. We describe, discuss, and delve into the mainstream reasons, conc
2017-11-17 09:42:00 Friday ET

The Trump administration garners congressional support from both Senate and the House of Representatives to pass the $1.5 trillion tax overhaul (Tax Cuts &a
2018-03-13 07:34:00 Tuesday ET

From crony capitalism to state capitalism, what economic policy lessons can we learn from President Putin's current reign in Russia? In the 15 years of
2020-01-01 13:39:00 Wednesday ET

President Trump approves a phase one trade agreement with China. This approval averts the introduction of new tariffs on Chinese imports. In return, China s
2019-10-29 13:36:00 Tuesday ET

The OECD projects global growth to decline from 3.2% to 2.9% in the current fiscal year 2019-2020. This global economic growth projection represents the slo