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Partial cross ownership and tacit collusion

Author

Listed:
  • Yossi Spiegel
  • David Gilo

Abstract

This paper shows how competing firms can facilitate tacit collusion by making passive investments in rivals. When firms are identical, only multilateral partial cross ownership (PCO) facilitates tacit collusion; the incentives of firms to collude in this case depend in a comlex way on the whole set of PCO in the industry. 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 of an efficient firm in a less efficient rival can facilitate tacit collusion.

Suggested Citation

  • Yossi Spiegel & David Gilo, 2004. "Partial cross ownership and tacit collusion," Econometric Society 2004 North American Summer Meetings 335, Econometric Society.
  • Handle: RePEc:ecm:nasm04:335
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    File URL: http://www.tau.ac.il/~spiegel/papers/collusion12.pdf
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    Cited by:

    1. Nicolò Pecora & Alessandro Spelta, 2014. "Shareholding Network in the Euro Area Banking Market," DISCE - Working Papers del Dipartimento di Economia e Finanza def014, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    2. Jeanine Miklós-Thal, 2011. "Optimal collusion under cost asymmetry," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 46(1), pages 99-125, January.
    3. repec:ctc:serie1:def14 is not listed on IDEAS

    More about this item

    Keywords

    partial cross ownership; tacit collusion; controlling shareholder; market sharing;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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