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Sequential play and cartel stability in a Cournot oligopoly

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  • Currarini, Sergio
  • Marini, Marco A.

Abstract

We reconsider the problem of cartel stability in a linear symmetric Cournot oligopoly by assuming that every coalition of firms defecting from a cartel can choose its quantity before the remaining firms. We show that differently from Salant et al. (1983) the only profitable cartel includes all firms in the industry. This result is shown to be robust to non linearities in payffs provided that the inverse demand function is not too log-concave.

Suggested Citation

  • Currarini, Sergio & Marini, Marco A., 2002. "Sequential play and cartel stability in a Cournot oligopoly," MPRA Paper 22137, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:22137
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    References listed on IDEAS

    as
    1. Marini, Marco A. & Currarini, Sergio, 2003. "A sequential approach to the characteristic function and the core in games with externalities," MPRA Paper 1689, University Library of Munich, Germany, revised 2003.
    2. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    3. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    4. Bloch, Francis, 1996. "Sequential Formation of Coalitions in Games with Externalities and Fixed Payoff Division," Games and Economic Behavior, Elsevier, vol. 14(1), pages 90-123, May.
    5. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-1064, July.
    6. Amir, R., 1996. "Cournot oligopoly and theory of supermodular games," LIDAM Reprints CORE 1228, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Amir, Rabah, 1996. "Cournot Oligopoly and the Theory of Supermodular Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 132-148, August.
    8. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
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    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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