Wednesday, March 9, 2011
Posted by D. Daniel Sokol
Pascal Billand, Christophe Bravard, Subhadip Chakrabarti, and Sudipta Sarangi describe Networks of Collaboration in Multi-market Oligopolies.
ABSTRACT: The result that firms competing in a Cournot oligopoly with pairwise collaboration form a complete network under zero or negligible link formation costs provided by Goyal and Joshi (2003) no longer hold in multi-market oligopolies. Link formation in one market aﬀects a firm’s profitability in another market in a possibly negative way resulting in the fact that it is no longer always profitable in an unambiguous manner. With non-negative link formation costs, the stable networks have a dominant group architecture and eﬃcient networks are charecterized by at most one non-singleton component with a geodesic distance between players that is less than three.