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...

We consider a model where bidders in an auction own passive partial claims over their rivals’ auction profits. While the cross ownership confers no ability to directly affect bidding behavior, the claims on rival profits dampen bidding competition. It is not uncommon for enforcement agencies...

This paper examines empirically the players’ intrabrand vertical price control, interbrand horizontal pricing coordination, and their learning process to equilibrium in a rare natural experiment of supergame where a well defined simultaneous-move price setting stage game is repeated every...

Site licensing of e-journals has been revolutionizing the way academic information is distributed. However, many librarians are concerned about the possibility that publishers might abuse site licensing by practicing bundling. In this paper, we analyze how bundling affects journal pricing in the...

This paper shows how rules restricting common ownership of multiple media outlets affect both the magnitude and diversity of the ideological content of programming. While in most industries the assumption that firms maximize profits is quite reasonable, we assume that media owners derive utility...

We develop a model in which firms set their salary levels before matching with workers. Wages fall relative to any competitive equilibrium while profits rise almost as much, implying little inefficiency. Furthermore, the best firms gain the most from the system while wages become compressed. We...

This paper develops a monopolistic competition model to study the characteristics of products, such as quality improvement and product diversity (function-specialization and individualization), and the division of labor in production. Different from the ordinary economic model, our utility...

Cournot oligopoly has been studied almost exclusively under the implicit assumption of perfectly competitive factor markets. However,oligopolistic firms procure often factors of production from imperfectly competitive markets. Okuguchi(1998,2000) has analyzed Cournot oligopoly under the...

This paper examines the relationship between input sector liberalization and product quality innovation and export orientation by a LDC firm given the complementarity between high input quality and high product quality. We show that input sector liberalization per se may not induce quality...

This paper shows that, unlike what has been found in other papers, a hydro reservoir is an effective tool to exercise market power. Its appealing as a tool is enhanced by the fact that there is no need to constrain total hydro production - a practice too easy to detect -; it suffices to distort...