Making Friends with Your Neighbors? Agglomeration and Tacit Collusion in The Lodging Industry
The Review of Economics and Statistics
2013
Agglomeration is a location pattern frequently observed in service industries such as hotels. This paper empirically examines whether agglomeration facilitates tacit collusion in the lodging industry using a quarterly data set of hotels in Texas. We jointly model a price and occupancy rate equation under a switching regression model to identify a collusive and noncollusive regime. The estimation results indicate that clustered hotels have a higher probability of being in the potential collusive regime than isolated properties in the same town. The identification of a collusive regime is also consistent with other factors considered to affect the sustainability of tacit collusion.
- DOI
- 10.1162/rest_a_00289
- Volume
- 95 (3)
- Pages
- 1002-1017
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref