Large Newsvendor Games
University of Turin
LUISS, Dipartimento di Economia e Finanza; Singapore University of Technology and Design (SUTD)
March, 10 2012
Games and Economic Behavior, Vol. 58, pp. 316-337, 2007
We consider a game, called newsvendor game, where several retailers, who face a random demand, can pool their resources and build a centralized inventory that stocks a single item on their behalf. Profits have to be allocated in a way that is advantageous to all the retailers. A game in characteristic form is obtained by assigning to each coalition its optimal expected profit. We consider newsvendor games with possibly an infinite number of newsvendors. We prove in great generality results about balancedness of the game, and we show that in a game with a continuum of players, under a nonatomic condition on the demand, the core is a singleton. For a particular class of demands we show how the core shrinks to a singleton when the number of players increases.
Keywords: Newsvendor games, Nonatomic games, Core, Balanced games
JEL Classification: C71Accepted Paper Series
Date posted: March 12, 2012
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