If firms compete in all-pay auctions with complete information, silent
shareholdings introduce asymmetric externalities into the allpay auction
framework. If the strongest firm owns a large share in the second strongest
firm, this may make the strongest firm abstain from bidding. As a consequence,
equilibrium profits of both firms may increase, but the prize may be allocated
less efficiently. The reverse ownership structure is also likely to increase
the profits of the firms involved in the ownership relationship but without
these negative efficiency effects.