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Networks of Collaboration in Oligopoly

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Author Info
Sumit Joshi (George Washington University)
Abstract

In an oligopoly, prior to choosing quantities/prices, 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. The collection of pair-wise links defines a collaboration network. We study stable and efficient networks under different types of market competition. We find that except under extreme competition, a la Bertrand, firms have an incentive to collaborate wit their competitors to lower costs of production. We find that two simple architectures, the complete network, where every firm has a collaboration link with every other firm, and the network with a dominant group, which contains a large number of completely connected firms and several isolated firms, are stable under different market conditions. We also observe that stable networks are often efficient from a social point of view.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0623.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:0623

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-37, December. [Downloadable!] (restricted)
  2. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December. [Downloadable!] (restricted)
  3. Goyal, S. & Joshi, S., 1999. "Bilateralism and free trade," Econometric Institute Report EI 9953-/A Revision_Date:, Erasmus University Rotterdam, Econometric Institute. [Downloadable!]
  4. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March. [Downloadable!] (restricted)
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  5. Debraj Ray & Rajiv Vohra, 1998. "A Theory of Endogenous Coalition Structures," Working Papers 98-1, Brown University, Department of Economics, revised Jan 1998.
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  6. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October. [Downloadable!] (restricted)
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  7. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August. [Downloadable!] (restricted)
  8. Francis Bloch, 1995. "Endogenous Structures of Association in Oligopolies," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 537-556, Autumn. [Downloadable!] (restricted)
  9. S. Goyal & S. Joshi, 1999. "Bilateralism and free trade," Econometric Institute Report 176, Erasmus University Rotterdam, Econometric Institute. [Downloadable!]
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    • Sanjeev Goyal & Sumit Joshi, 2006. "Bilateralism And Free Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 749-778, 08. [Downloadable!] (restricted)
  10. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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  11. Scott A. Boorman, 1975. "A Combinatorial Optimization Model for Transmission of Job Information through Contact Networks," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 216-249, Spring. [Downloadable!] (restricted)
  12. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-20, December. [Downloadable!] (restricted)
  13. Roger B. Myerson, 1976. "Graphs and Cooperation in Games," Discussion Papers 246, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  14. Leahy, Dermot & Neary, J Peter, 1997. "Public Policy towards R&D in Oligopolistic Industries," American Economic Review, American Economic Association, vol. 87(4), pages 642-62, September. [Downloadable!] (restricted)
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  15. Bloch, Francis, 1996. "Sequential Formation of Coalitions in Games with Externalities and Fixed Payoff Division," Games and Economic Behavior, Elsevier, vol. 14(1), pages 90-123, May. [Downloadable!] (restricted)
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  3. Nicolas CARAYOL (BETA) & Pascale ROUX (GRES-LEREPS), 2003. "Self-Organizing Innovation Networks: When do Small Worlds Emerge?," Cahiers du GRES 2003-08, Groupement de Recherches Economiques et Sociales. [Downloadable!]
  4. Narine Badasyan & Subhadip Chakrabarti, 2004. "Intra-backbone and Inter-backbone Peering Among Internet Service Providers," Microeconomics 0407006, EconWPA. [Downloadable!]
  5. Sébastien Vivier-Lirimont, 2004. "Interbanking networks : towards a small financial world ?," Cahiers de la Maison des Sciences Economiques v04046, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
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  7. Filippo VERGARA CAFFARELLI, 2004. "Non-Cooperative Network Formation with Network Maintenance Costs," Economics Working Papers ECO2004/18, European University Institute. [Downloadable!]
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