Collaboration and Competition in Networks
AbstractIn a Cournot oligopoly, prior to choosing quantity, each firm has an opportunity to form pair-wise collaborative links with other firms. These pair-wise links lower costs of production of the firms which form a link and, if there are knowledge spillovers, also lower costs of other firms which are connected to them. The collection of pair-wise links defines a collaboration network. We characterize stable networks and compare them with efficient networks. We find that the complete network is stable, irrespective of the assumptions on spillovers across collaboration links. This is in contrast to some recent work on group formation in Cournot oligopoly, see e.g., Bloch (1995). Our finding is also interesting from a welfare point of view since, in such settings, the complete network is efficient from a social point of view.
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Bibliographic InfoPaper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number 64.
Length: 26 pages
Date of creation: May 1999
Date of revision:
Find related papers by JEL classification:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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- Sanjeev Goyal & Sumit Joshi, 2000.
"Networks of Collaboration in Oligopoly,"
Tinbergen Institute Discussion Papers
00-092/1, Tinbergen Institute.
- Sumit Joshi, 2000. "Networks of Collaboration in Oligopoly," Econometric Society World Congress 2000 Contributed Papers 0623, Econometric Society.
- Goyal, S. & Joshi, S., 2000. "Networks of Collaboration in Oligopoly," Econometric Institute Report EI 9952-/A, Erasmus University Rotterdam, Econometric Institute.
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