JEL Classification Numbers: D43, L41
| Partial cross ownership and tacit collusion |
| David Gilo, Tel Aviv University |
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| Yossi Spiegel, Tel Aviv University |
| Current version: February 23, 2005 |
| Abstract: This paper examines the effects that passive investments in rival firms have on the incentives of firms to engage in tacit collusion. In general, these incentives depend in a complex way on the entire partial cross ownership (PCO) structure in the industry. We establish necessary and su¢cient conditions for PCO arrangements to facilitate tacit collusion and also examine how tacit collusion is affected when firms’ controllers make direct passive investments in rival firms. |
| Keywords:
partial cross ownership, repeated Bertrand oligopoly, tacit collusion,
maverick firm, controlling shareholder
JEL Classification Numbers: D43, L41 |
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| Last updated: February 28, 2005 |