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Partial passive ownership holdings destabilizing collusion

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  • Pal, Rupayan
  • Petrakis, Emmanuel

Abstract

In a homogenous good Cournot duopoly with linear demand, we demonstrate that partial passive ownership (PPO) holdings destabilize collusion as long as the bargaining power of the firm that owns stakes in its rival is not too high. Notably, if both firms have equal bargaining power during their negotiations over the surplus generated by collusion, an increase in PPO holdings always makes collusion less stable. Our findings have important policy implications for antitrust authorities.

Suggested Citation

  • Pal, Rupayan & Petrakis, Emmanuel, 2025. "Partial passive ownership holdings destabilizing collusion," Economics Letters, Elsevier, vol. 257(C).
    • Handle: RePEc:eee:ecolet:v:257:y:2025:i:c:s0165176525004793
    DOI: 10.1016/j.econlet.2025.112642
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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