| Author/Presenter |
Patrick de Lamirande (Cape Breton University) |
| Co-authors |
Jean-Daniel Guigou (Université du Luxembourg) |
| |
Bruno Lovat (Université de Nancy 2 ) |
| Title |
Participation and Tacit Collusion |
| Abstract |
We use the model developed by Clayton and Jorgensen (2005) to analyze the effect of cross holding on collusion. Their model consists of a duopoly competing in quantity in a differentiated goods market. Each firm sets the level of the equity position in each other's non-voting stock and the quantity to produce. We find that tacit collusion is less likely when firms can choose short position. However, when goods are perfect substitutes, tacit collusion may easily arise when firms plan to punish a deviation by playing a non-symmetric equilibrium. Consequently, antitrust laws can reduce the likelihood of tacit collusion by limiting long positions (which would diminish the positive effect of collusion) or by limiting short positions (which would diminish the threat of the punishment). |
| Web Link |
http://economics.ca/2007/papers/0305.pdf |