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.
Date of this Version
David Gilo, Yossi Moshe, and Yossi Spiegel, "Partial cross ownership and tacit collusion" (August 2004). Tel Aviv University Law Faculty Papers. Working Paper 2.