Coalition-proof supply function equilibria in oligopoly
In an industry where firms compete via supply functions the set of market outcomes that can arise is large. If decreasing supply functions are ruled out, the set of equilibrium outcomes reduces somewhat, but it remains large: any price between the competitive price and the Cournot price can be sustained by a supply function equilibrium. In sharp contrast, this multiplicity disappears when firms take into account the gains they can attain by coordinating their actions: if the number of firms is above a threshold we identify (e.g., three if demand is linear), then the Cournot equilibrium is the unique outcome that can be sustained by a coalition-proof supply function equilibrium.
(This abstract was borrowed from another version of this item.)
References listed on IDEAS
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.:
- Grossman, Sanford J, 1981. "Nash Equilibrium and the Industrial Organization of Markets with Large Fixed Costs," Econometrica, Econometric Society, vol. 49(5), pages 1149-72, September.
- Yi, Sang-Seung, 1999. "On the Coalition-Proofness of the Pareto Frontier of the Set of Nash Equilibria," Games and Economic Behavior, Elsevier, vol. 26(2), pages 353-364, January.
- Green, Richard J & Newbery, David M, 1992.
"Competition in the British Electricity Spot Market,"
Journal of Political Economy,
University of Chicago Press, vol. 100(5), pages 929-53, October.
- Green, Richard & Newbery, David M G, 1991. "Competition in the British Electricity Spot Market," CEPR Discussion Papers 557, C.E.P.R. Discussion Papers.
- Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
- AMIR, Rabah & LAMBSON, Val, 1999.
"On the effects of entry in Cournot markets,"
CORE Discussion Papers
1999059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Rabah Amir & Val E. Lambson, 1998. "On the Effects of Entry in Cournot Markets," CIE Discussion Papers 1998-06, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Rabah Amir, 2000. "On the Effects of Entry in Cournot Markets," Econometric Society World Congress 2000 Contributed Papers 1475, Econometric Society.
- Bernheim, B. Douglas & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria II. Applications," Journal of Economic Theory, Elsevier, vol. 42(1), pages 13-29, June.
- Moreno, Diego & Wooders, John, 1996.
Games and Economic Behavior,
Elsevier, vol. 17(1), pages 80-112, November.
- Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-77, November.
- Paul Klemperer & Margaret Meyer, 1986. "Price Competition vs. Quantity Competition: The Role of Uncertainty," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 618-638, Winter.
When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:114:y:2004:i:2:p:231-254. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.