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Coalitional Approaches to Collusive Agreements in Oligopoly Games

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  • Sergio Currarini

    () (Department of Economics,Faculty of Economics, Università degli Studi di Venezia "Ca' Foscari")

  • Marco Marini

    () (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo" and CREI, Università di Roma III)

Abstract

In this paper we review a number of coalitional solution concepts for the analysis of the stability of cartels and mergers under oligopoly. We show that, although so far the industrial organization and the cooperative game-theoretic literature have proceeded somehow independently on this topic, the two approaches are highly inter-connected. We first consider the basic problem of the stability of the whole industry association of firms under oligopoly and, for this purpose, we introduce the concept of core in games with externalities. We show that different assumptions on the behaviour as well as on the timing of the coalitions of firms yield very di¤erent results on the set of allocations which are core-stable. We then consider the stability of associations of firms organized in coalition structures different from the grand coalition. To this end, various coalition formation games recently introduced by the so called endogenous coalition formation literature are critically reviewed. Again, di¤erent assumptions concerning the timing and the behaviout of firms are shown to yield a wide range of different results.

Suggested Citation

  • Sergio Currarini & Marco Marini, 2011. "Coalitional Approaches to Collusive Agreements in Oligopoly Games," Working Papers 1113, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
  • Handle: RePEc:urb:wpaper:11_13
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    References listed on IDEAS

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    Cited by:

    1. Takayuki Watanabe & Nobuo Matsubayashi, 2013. "Note on Stable Mergers in a Market with Asymmetric Substitutability," Economics Bulletin, AccessEcon, vol. 33(3), pages 2024-2033.
    2. Marini, Marco A., 2016. "Collusive Agreements in Vertically Differentiated Markets," MPRA Paper 75369, University Library of Munich, Germany.
    3. Gabszewicz, J.J. & Marini, M. & Tarola, O., 2015. "Alliance Formation in a Vertically Differentiated Market," CORE Discussion Papers 2015030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Jaskold Gabszewicz, Jean & Marini, Marco A. & Tarola, Ornella, 2017. "Endogenous Mergers in Markets with Vertically Differentiated Products," MPRA Paper 80528, University Library of Munich, Germany.
    5. Gabszewicz, Jean J. & Marini, Marco A. & Tarola, Ornella, 2016. "Core existence in vertically differentiated markets," Economics Letters, Elsevier, vol. 149(C), pages 28-32.
    6. Gabszewicz, Jean J. & Marini, Marco A. & Tarola, Ornella, 2015. "Endogenous Mergers in Vertically Differentiated Markets," MPRA Paper 68318, University Library of Munich, Germany.

    More about this item

    Keywords

    Cooperative Games; Coalitions; Mergers; Cartels; Core; Games with Externalities; Endogenous Coalition Formation.;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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