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

abstract

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

altmetric score

  • 0.25

author list (cited authors)

  • Gan, L. i., & Hernandez, M. A.

citation count

  • 24

publication date

  • July 2013