Wednesday, February 27, 2019
Zheng Gong, Shanghai Academy of Social Sciences (SASS), Graduate School explores Tacit Collusion of Partial Cross Ownership Under Cournot Model.
ABSTRACT: Partial cross ownership (PCO) among firms affects their incentives to engage in tacit collusion. We analyze the market equilibrium of an n-firm industry which allows asymmetric cross ownership and establish a general framework to analyze the collusion behavior, under Cournot model. We find that in some ways increasing PCO hinders tacit collusion under traditional uniform output distribution scheme. However, this scheme is not always feasible for collusion. For a greater variety of situations, we examine different subgame perfect equilibriums and conclude that, tacit collusion can be facilitated when PCO increases.