Lead, Follow or Cooperate? Endogenous Timing & Cooperation in Symmetric Duopoly Games
The aim of this paper is to extend Hamilton and Slutsky's (1990) endogenous timing game by including the possibility for players to cooperate. At an initial stage players are assumed to announce both their purpose to play early or late a given duopoly game as well as their intention to cooperate or not with their rival. The cooperation and timing formation rule is rather simple: when both players agree to cooperate and play with a given timing, they end up playing their actions coordinately and simultaneously. Otherwise, they play as singletons with the timing as prescribed by their own announcement. We check for the existence of a subgame perfect Nash equilibrium (in pure strategies) of such a cooperation-timing duopoly game. Two main results on the emergence of cooperation are provided. If players' actions in the symmetric duopoly game are strategic substitutes and there is no discount, cooperating early is a subgame perfect equilibrium of the extended timing-cooperation game. Conversely, cooperating late (at period two) represents an equilibrium when players' strategies are strategic complements. Other equilibria are also possible. Most importantly, our model shows that, in general, the success of cooperation is a¤ected by the endogenous timing of the game. Moreover, the slope of players' best-replies appears crucial both for the success of cooperation as well as for the players' choice of sequencing their market actions.
|Date of creation:||2011|
|Date of revision:||2011|
|Contact details of provider:|| Web page: http://www.econ.uniurb.it/|
More information through EDIRC
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.:
- Sergio Currarini & Marco A. Marini, 2006.
"Coalition Formation In Games Without Synergies,"
International Game Theory Review (IGTR),
World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 111-126.
- Hamilton, J.H. & Slutsky, S.M., 1988.
"Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria,"
88-4, Florida - College of Business Administration.
- Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
- Matthew O. Jackson & Asher Wolinsky, 1995.
"A Strategic Model of Social and Economic Networks,"
1098R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- van Damme, Eric & Hurkens, Sjaak, 2004.
"Endogenous price leadership,"
Games and Economic Behavior,
Elsevier, vol. 47(2), pages 404-420, May.
- Eric van Damme & Sjaak Hurkens, 2001. "Endogenous price leadership," Economics Working Papers 581, Department of Economics and Business, Universitat Pompeu Fabra.
- van Damme, E.E.C. & Hurkens, J.P.M., 1998. "Endogenous price leadership," Discussion Paper 98.68, Tilburg University, Center for Economic Research.
- Eric van Damme & Sjaak Hurkens, 1998. "Endogenous price leadership," Economics Working Papers 289, Department of Economics and Business, Universitat Pompeu Fabra.
- van Damme, E.E.C. & Hurkens, S., 2004. "Endogenous price leadership," Other publications TiSEM 0bc41e9f-cede-46e7-bab6-b, Tilburg University, School of Economics and Management.
- Amir Rabah, 1995. "Endogenous Timing in Two-Player Games: A Counterexample," Games and Economic Behavior, Elsevier, vol. 9(2), pages 234-237, May.
- von Stengel, Bernhard, 2010. "Follower payoffs in symmetric duopoly games," Games and Economic Behavior, Elsevier, vol. 69(2), pages 512-516, July.
- Ray, Debraj & Vohra, Rajiv, 1997.
"Equilibrium Binding Agreements,"
Journal of Economic Theory,
Elsevier, vol. 73(1), pages 30-78, March.
- Jim Jin & Rabah Amir & Madjid Amir, 2000.
"Sequencing R&D decisions in a two-period duopoly with spillovers,"
Springer, vol. 15(2), pages 297-317.
- Madjid Amir & Rabah Amir & Jim Jin, 1999. "Sequencing R&D Decisions in a Two-period Duopoly with Spillovers," CIE Discussion Papers 1999-06, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Amir, Rabah & Grilo, Isabel, 1999.
"Stackelberg versus Cournot Equilibrium,"
Games and Economic Behavior,
Elsevier, vol. 26(1), pages 1-21, January.
- Currarini, Sergio & Marini, Marco, 2002.
"A conjectural cooperative equilibrium for strategic form games,"
33381, University Library of Munich, Germany.
- Currarini, Sergio & Marini, Marco, 2002. "A conjectural cooperative equilibrium for strategic form games," MPRA Paper 33384, University Library of Munich, Germany.
- Ray, Debraj, 2007. "A Game-Theoretic Perspective on Coalition Formation," OUP Catalogue, Oxford University Press, number 9780199207954, May.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:urb:wpaper:11_12. 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: (Carmela Nicoletti)
If references are entirely missing, you can add them using this form.