Partial Cross Ownership and Tacit Collusion

36 Pages Posted: 14 Apr 2005

See all articles by David Gilo

David Gilo

Tel Aviv University - Buchmann Faculty of Law

Yossi Moshe

Ben-Gurion University of the Negev

Yossi Spiegel

Tel Aviv University, Coller School of Management; Centre for Economic Policy Research (CEPR); Centre for European Economic Research (ZEW)

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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 sufficient 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

JEL Classification: D43, L41

Suggested Citation

Gilo, David and Moshe, Yossi and Spiegel, Yossi, Partial Cross Ownership and Tacit Collusion. RAND Journal of Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=691224

David Gilo (Contact Author)

Tel Aviv University - Buchmann Faculty of Law ( email )

Ramat Aviv
Tel Aviv 69978, IL
Israel
+972-3-6406299 (Phone)

Yossi Moshe

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheva 84105, 84105
Israel

Yossi Spiegel

Tel Aviv University, Coller School of Management ( email )

Ramat Aviv, Tel Aviv, 69978
Israel
972-3-640-9063 (Phone)
972-3-640-7739 (Fax)

HOME PAGE: http://www.tau.ac.il/~spiegel

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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