Partial cross ownership and tacit collusion

Arbeitspapier

This paper shows how competing firms can facilitate tacit collusion by making passive investments in rivals. In general, the incentives of firms to collude depend in a complex way on the whole set of partial cross ownership (PCO) in the industry. We show that when firms are identical, only multilateral PCO may (but need not) facilitate tacit collusion. A firm?s controller can facilitate tacit collusion further by investing directly in rival firms and by diluting his stake in his own firm. In the presence of cost asymmetries, even unilateral PCO by efficient firms in a less efficient rival can facilitate tacit collusion.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CSIO Working Paper ; No. 0038

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Monopolization; Horizontal Anticompetitive Practices
• Subject: partial cross ownership ; repeated Bertrand oligopoly ; tacit collusion ; controlling shareholder ; cost asymmetries ; Kartell ; Kapitalbeteiligung ; Eigentümerstruktur ; Wiederholte Spiele

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Spiegel, Yossi ; Gilo, David
• Event: Veröffentlichung
• (who): Northwestern University, Center for the Study of Industrial Organization (CSIO)
• (where): Evanston, IL
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/23467
• Last update: 10.03.2025, 11:42 AM CET