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Formation of a Coalition-Proof Stable Cartel

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  • Sylvie Thoron

Abstract

Formation of coalitions in oligopolies is modeled as a noncooperative game in which firms' strategies have a binary form (to cooperate or not). The author demonstrates a one-to-one correspondence between stable cartels defined by C. d'Aspremont et al. (1983) and the Nash equilibria of this game. Using a 'coalition-proof Nash equilibrium,' they define the concept of a coalition-proof stable cartel and prove that there is a unique equilibrium.

Suggested Citation

  • Sylvie Thoron, 1998. "Formation of a Coalition-Proof Stable Cartel," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 63-76, February.
  • Handle: RePEc:cje:issued:v:31:y:1998:i:1:p:63-76
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    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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