This paper shows how competing firms can facilitate tacit collusion by making passive investments in rivals. When firms are identical, only multilateral partial cross ownership (PCO) facilitates tacit collusion; the incentives of firms to collude in this case depend in a comlex way on the whole...

Through altering competitive conditions, globalisation can have a significant impact on productivity of the domestic economy. Foreign competition can stimulate the productivity improvements by domestic firms or it can lead to the elimination of inefficient producers. Alternatively, the threat or...