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A sequential approach to the characteristic function and the core in games with externalities

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  • Marini, Marco A.
  • Currarini, Sergio

Abstract

This paper proposes a formulation of coalitional payoff possibilities in games with externalities, based on the assumption that forming coalitions can exploit a ”first mover advantage”. We derive a characteristic function and show that when outside players play their best response noncooperatively, the core is nonempty in games with strategic complements. We apply this result to Cournot and Bertrand games and to public goods economies.

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File URL: http://mpra.ub.uni-muenchen.de/1689/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1689.

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Date of creation: 2003
Date of revision: 2003
Handle: RePEc:pra:mprapa:1689

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Related research

Keywords: Core; cooperative games; externalities;

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References

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  1. Ray, D. & Vohra, R., 1993. "Equilibrium Binding Agreements," Papers, Boston University - Department of Economics 21, Boston University - Department of Economics.
  2. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 568, C.E.P.R. Discussion Papers.
  3. Francis Bloch, 1995. "Endogenous Structures of Association in Oligopolies," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 537-556, Autumn.
  4. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(3), pages 488-511, June.
  5. Ray, D. & Vohra, R., 1996. "A Theory of Endogenous Coalition Structure," Papers, Boston University - Industry Studies Programme 68, Boston University - Industry Studies Programme.
  6. Gal-Or, Esther, 1985. "First Mover and Second Mover Advantages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 649-53, October.
  7. Amir, Rabah, 1996. "Cournot Oligopoly and the Theory of Supermodular Games," Games and Economic Behavior, Elsevier, Elsevier, vol. 15(2), pages 132-148, August.
  8. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, Econometric Society, vol. 51(4), pages 1047-64, July.
  9. Bloch, Francis, 1996. "Sequential Formation of Coalitions in Games with Externalities and Fixed Payoff Division," Games and Economic Behavior, Elsevier, Elsevier, vol. 14(1), pages 90-123, May.
  10. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 98(2), pages 185-99, May.
  11. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, Elsevier, vol. 20(2), pages 201-237, August.
  12. Murdoch, James C. & Sandler, Todd, 1997. "The voluntary provision of a pure public good: The case of reduced CFC emissions and the Montreal Protocol," Journal of Public Economics, Elsevier, Elsevier, vol. 63(3), pages 331-349, February.
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Citations

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Cited by:
  1. Marco Marini & Maria Luisa Petit & Roberta Sestini, 2012. "Strategic Timing in R&D Agreements," DIAG Technical Reports 2012-07, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  2. Marco Marini & Giorgio Rodano, 2011. "Lead, Follow or Cooperate? Endogenous Timing & Cooperation in Symmetric Duopoly Games," Working Papers, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini 1112, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
  3. Marco A. Marini, 2007. "An Overview of Coalitions and Networks Formation Models for Economic Applications," Working Papers, CREI Università degli Studi Roma Tre 0707, CREI Università degli Studi Roma Tre, revised 2007.
  4. Currarini, Sergio & Marini, Marco A., 2002. "Sequential play and cartel stability in a Cournot oligopoly," MPRA Paper 22137, University Library of Munich, Germany.
  5. Marco Marini, 2007. "An Overview of Coalition & Network Formation Models for Economic Applications," Working Papers, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini 0712, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2007.
  6. Marco Marini & Giorgio Rodano, 2012. "Sequential vs Collusive Payoffs in Symmetric Duopoly Games," DIAG Technical Reports 2012-06, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  7. Sergio Currarini & Marco A. Marini, 2013. "Coalitional Approaches to Collusive Agreements in Oligopoly Games," DIAG Technical Reports 2013-15, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  8. Theo Driessen & Dongshuang Hou & Aymeric Lardon, 2011. "Stackelberg oligopoly TU-games: characterization of the core and 1-concavity of the dual game," Working Papers, HAL halshs-00610840, HAL.

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