Partial vertical ownership and tacit collusion

Abstract

A partial ownership held by a downstream rm creates a perceived cost asymmetry
towards its competitors. In this article, it is shown that this will have a negative impact
on the sustainability of a collusive scenario. This is a similar result to natural di¤erences
in production costs of rms. However, this participation makes it so it is more likely
to be the most e cient rm to deviate, and not the least one, as in natural assymetry.
The existance of participation never makes collusion easier to sustain than its absence.
This also creates a tool for the upstream rm to break, or incentivate, joint downstream
decision-making, as it may also be used to increase its directed demand. Similarly, this
tool can be used by a regulator to increase welfare by avoiding market concentration

Date of Award	26 Jul 2017
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Duarte Miguel Machado Carneiro de Brito (Supervisor)