Sequential Formation of Coalitions through Bilateral Agreements in a Cournot Setting

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Sequential Formation of Coalitions through Bilateral Agreements in a Cournot Setting

Author Info

Inés Macho-Stadler () (Department of Economics, Universidad Autónoma de Barcelona)
David Pérez-Castrillo () (Department of Economics, Universidad Autónoma de Barcelona)
Nicolás Porteiro () (Department of Economics, Universidad Pablo de Olavide)

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Abstract

We 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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Paper provided by Universidad Pablo de Olavide, Departamento de Economía in its series Working Papers with number 06.01.

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Length: 30 pages
Date of creation: Feb 2006
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Handle: RePEc:pab:wpaper:06.01

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Article
- 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. [Downloadable!] (restricted)

Find related papers by JEL classification:
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)

References listed on IDEAS
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Other versions:
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repec:fth:tilbur:99121 is not listed on IDEAS
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