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Partial cross ownership and tacit collusion
Author(s) -
Gilo David,
Moshe Yossi,
Spiegel Yossi
Publication year - 2006
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/j.1756-2171.2006.tb00005.x
Subject(s) - tacit collusion , collusion , incentive , industrial organization , business , tacit knowledge , microeconomics , economics , computer science , knowledge management
We examine 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 .