Big Data

Networks Of Collaboration In Multi-market Oligopolies

Date Added: Jan 2011
Format: PDF

The result that firms competing in a Cournot oligopoly with pair wise 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 dominant group architecture and efficient networks are characterized by at most one non-singleton component with a geodesic distance between players that is less than three.