Tacit Collusion of Partial Cross Ownership Under Cournot Competition

Abstract

Partial cross ownership (PCO) among firms affects their incentives to engage in tacit collusion. We analyze collusion behavior in an n-firm industry which allows asymmetric cross ownership, under Cournot competition. We find that in some ways increasing PCO hinders tacit collusion under the 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.