Making Friends with Your Neighbors? Agglomeration and Tacit Collusion in The Lodging Industry Academic Article uri icon


  • 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. 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

published proceedings

  • Review of Economics and Statistics

author list (cited authors)

  • Gan, L. i., & Hernandez, M. A.

complete list of authors

  • Gan, Li||Hernandez, Manuel A

publication date

  • July 2013