Sequential Formation of Coalitions through Bilateral Agreements in a Cournot Setting
AbstractWe study a sequential protocol of endogenous coalition formation based on a process of bilateral agreements among the players. We apply the game to a Cournot environment with linear demand and constant average costs. We show that the final outcome of any Subgame Perfect Equilibrium of the game is the grand coalition, provided the initial number of firms is high enough and they are sufficiently patient.
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Bibliographic InfoPaper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 06.01.
Length: 30 pages
Date of creation: Feb 2006
Date of revision:
Coalition formation; bilateral agreements; Cournot.;
Other versions of this item:
- Inés Macho-Stadler & David Pérez-Castrillo & Nicolás Porteiro, 2006. "Sequential Formation of Coalitions Through Bilateral Agreements in a Cournot Setting," International Journal of Game Theory, Springer, vol. 34(2), pages 207-228, August.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D40 - Microeconomics - - Market Structure and Pricing - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-11 (All new papers)
- NEP-GTH-2006-03-11 (Game Theory)
- NEP-MIC-2006-03-11 (Microeconomics)
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