Abstract
The cartelizing effects of firms' shareholding in rivals have been well established theoretically, yet empirical instances of such are rate to nonexistent. It is argued here that if the stock market is efficient in the sense that share prices reflect post-share trading product market equilibria, then acquiring shares in rivals is not subgame perfect for Cournot oligopolies but is subgame perfect for some Bertrand oligopolies. Acquiring a silent interest in a rival is an example of the “fat cat ploy”. That the stock market is not a cartel maker is consistent with Cournot having wide empirical application, but not with Bertrand.
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