IDEAS home Printed from https://ideas.repec.org/a/bla/ijethy/v6y2010i4p341-354.html

Strategic profit sharing between firms

Author

Listed:
  • José Luis Ferreira
  • Roberts Waddle

Abstract

We introduce the possibility of unilaterally giving profits away to the rival in different oligopolistic contexts. We find that this strategy may be profitable in some circumstances, thus providing a context for partial tacit collusion in one‐shot oligopolistic interactions. Although the strategy in itself may look unrealistic, we argue that it may be hidden behind a more complicated relation of the firms.

Suggested Citation

  • José Luis Ferreira & Roberts Waddle, 2010. "Strategic profit sharing between firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(4), pages 341-354, December.
    • Handle: RePEc:bla:ijethy:v:6:y:2010:i:4:p:341-354
    DOI: 10.1111/j.1742-7363.2010.00143.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1742-7363.2010.00143.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1742-7363.2010.00143.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Waddle, Roberts, 2005. "Strategic profit sharing between firms: an apllication to joint ventures," UC3M Working papers. Economics we051003, Universidad Carlos III de Madrid. Departamento de Economía.
    2. Waddle, Roberts, 2005. "Strategic profit sharing between firms: a primer," UC3M Working papers. Economics we050801, Universidad Carlos III de Madrid. Departamento de Economía.
    3. David Gilo & Yossi Moshe & Yossi Spiegel, 2006. "Partial Cross Ownership and Tacit Collusion," RAND Journal of Economics, The RAND Corporation, vol. 37(1), pages 81-99, Spring.
    4. Makoto Yano & Takashi Komatsubara, 2006. "Endogenous price leadership and technological differences," International Journal of Economic Theory, The International Society for Economic Theory, vol. 2(3‐4), pages 365-383, September.
    5. FitzRoy, Felix R & Kraft, Kornelius, 1986. "Profitability and Profit-Sharing," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 113-130, December.
    6. Joseph Farrell & Carl Shapiro, 1990. "Asset Ownership and Market Structure in Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 275-292, Summer.
    7. Ramon Caminal & Xavier Vives, 1996. "Why Market Shares Matter: An Information-Based Theory," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 221-239, Summer.
    8. Waddle, Roberts, 2005. "Strategic profit sharing between firms: the bertrand model," UC3M Working papers. Economics we050902, Universidad Carlos III de Madrid. Departamento de Economía.
    9. Matthew O. Jackson & Simon Wilkie, 2005. "Endogenous Games and Mechanisms: Side Payments Among Players," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 543-566.
    10. Krishnendu G. Dastidar & Dave Furth, 2005. "Endogenous price leadership in a duopoly: Equal products, unequal technology," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(3), pages 189-210, September.
    11. David Gilo & Yossi Moshe & Yossi Spiegel, 2006. "Partial cross ownership and tacit collusion," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 81-99, March.
    12. Waddle, Roberts, 2005. "Strategic profit sharing between firms: a win-win strategy," UC3M Working papers. Economics we051104, Universidad Carlos III de Madrid. Departamento de Economía.
    13. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    14. Malueg, David A., 1992. "Collusive behavior and partial ownership of rivals," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 27-34, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Do, Jihwan, 2022. "Cheating and compensation in price-fixing cartels," Journal of Economic Theory, Elsevier, vol. 200(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yang-Ming Chang & Manaf Sellak, 2024. "Strategic environmental policy in a differentiated duopoly with overlapping ownership: a welfare analysis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(2), pages 199-217, April.
    2. Juan Carlos Bárcena‐Ruiz & Amagoia Sagasta, 2021. "Cross‐ownership and corporate social responsibility," Manchester School, University of Manchester, vol. 89(4), pages 367-384, July.
    3. Samuel Haas & Johannes Paha, 2021. "Non-Controlling Minority Shareholdings and Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 431-454, May.
    4. Karle, H. & Klein, T.J. & Stahl, K.O., 2011. "Ownership and Control in a Competitive Industry," Other publications TiSEM 75fbaeb6-c5b2-498b-93b9-e, Tilburg University, School of Economics and Management.
    5. Sven Heim & Kai Hhschelrath & Ulrich Laitenberger & Yossi Spiegel, 2017. "Minority Share Acquisitions and Collusion: Evidence from the Introduction of National Leniency Programs," Working Papers hal-01952937, HAL.
    6. repec:ehu:ikerla:6367 is not listed on IDEAS
    7. Arijit Mukherjee, 2023. "Losses from cross-holdings in a duopoly with convex cost and strategic input price determination," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 81-91, April.
    8. Swapnendu Banerjee & Arijit Mukherjee & Sougata Poddar, 2025. "Product differentiation, demand expansion and the welfare effects of cross‐ownership," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(1), pages 193-226, February.
    9. Yi Li, 2025. "Endogenous equity shares in duopoly markets with product differentiation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(1), pages 227-246, February.
    10. Benndorf, Volker & Odenkirchen, Johannes, 2021. "An experiment on partial cross-ownership in oligopolistic markets," International Journal of Industrial Organization, Elsevier, vol. 78(C).
    11. Li, Youping & Zhang, Jianhu & Zhou, Zipeng, 2023. "Vertical differentiation with overlapping ownership," Economics Letters, Elsevier, vol. 222(C).
    12. Bárcena-Ruiz, Juan Carlos & Sagasta, Amagoia, 2021. "Environmental policies with consumer-friendly firms and cross-ownership," Economic Modelling, Elsevier, vol. 103(C).
    13. Youping Li & Jie Shuai, 2022. "Correction to: Input price discrimination and horizontal shareholding," Journal of Regulatory Economics, Springer, vol. 61(2), pages 168-168, April.
    14. Heijnen, Pim & Schoonbeek, Lambert, 2020. "Cross-shareholdings and competition in a rent-seeking contest," International Journal of Industrial Organization, Elsevier, vol. 71(C).
    15. Hongkun Ma & Cheng-Zhong Qin & Chenhang Zeng, 2024. "Incentive and welfare implications of cross-holdings in oligopoly," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 77(4), pages 975-997, June.
    16. Samuel de Haas & Johannes Paha, 2016. "Partial cross ownership and collusion," MAGKS Papers on Economics 201632, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    17. Jie Shuai & Mengyuan Xia & Chenhang Zeng, 2023. "Upstream market structure and downstream partial ownership," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(1), pages 22-47, January.
    18. Bárcena-Ruiz, Juan Carlos & Campo, María Luz, 2012. "Partial cross-ownership and strategic environmental policy," Resource and Energy Economics, Elsevier, vol. 34(2), pages 198-210.
    19. Cao, Zhigang & Li, Guopeng & Shen, Sixian & Zhu, Feng, 2025. "Potentials in quadratic Cournot cross-holding games," Journal of Mathematical Economics, Elsevier, vol. 119(C).
    20. Dong, Quan & Chang, Yang-Ming, 2020. "Emission taxes vs. environmental standards under partial ownership arrangements," Research in Economics, Elsevier, vol. 74(3), pages 250-262.
    21. Yasuhiro Arikawa & Atsushi Kato, 2015. "Cross Shareholding and Initiative Effects," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(2), pages 305-319, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ijethy:v:6:y:2010:i:4:p:341-354. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1742-7355 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.