We examine the effects that passive investments in rival firms have on the incentives of firms to engage in tacit collusion. In general, these incentives depend in a complex way on the entire partial cross ownership (PCO) structure in the industry. We establish necessary and sufficient...

We examine the interaction between two interconnected networks (e.g., two LECs) and a third network (e.g., an IXC) seeking access to their customer base. The IXC could either interconnect with both LECs or interconnect with only one LEC and transit calls to the other LEC via the …rst LEC’s...

This paper reviews the Israeli credit card industry and discusses in detail the ongoing attempts by the Israeli Antitrust Authority (IAA) to promote competition in the industry. Currently, these attempts had only limited success: there is still little competition both on the issuing and the...

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...

An injurer’s activity often exposes multiple potential victims to the risk of harm. We show that under negligence—the tort system’s dominant regime—such victims face a collective-action problem in choosing their activity levels. An increase in one victim’s activity level confers a...

We examine the strategic behavior of leaders and followers in sequential duopoly experiments in which followers either perfectly observe the leaders’ actions or else observe nothing. Our experiments show that consistent with the theory, leaders enjoy a greater …rst-mover advantage when...

We consider auction environments in which bidders must incur a cost to learn their valuations and study the optimal selling mechanisms in such environments. These mechanisms specify for each period, as a function of the bids in previous periods, which new potential buyers should be asked to bid....