Coalition-Proof Supply Function Equilibria in Oligopoly

Posted: 25 Nov 2014 Last revised: 14 Apr 2015

See all articles by Juan Delgado

Juan Delgado

GAMES Economics; Universidad Carlos III de Madrid - Economics Dpt.

Date Written: November 24, 2004

Abstract

In an industry where firms compete via supply functions, the set of equilibrium outcomes is large. If decreasing supply functions are ruled out, this set is reduced significantly, but remains large. Specifically, the set of prices that can be sustained by supply function equilibria is the interval between the competitive price and the Cournot price. In sharp contrast, when the number of firms is above a threshold we identify (e.g., three if demand is linear), only the Cournot outcome can be sustained by a coalition-proof supply function equilibrium.

Keywords: Oligopoly; Cournot; Competition via supply functions; Coalition-proofness

JEL Classification: C72; D43; L13; L51

Suggested Citation

Delgado, Juan, Coalition-Proof Supply Function Equilibria in Oligopoly (November 24, 2004). Journal of Economic Theory, Vol. 114, No. 2, 2004, Available at SSRN: https://ssrn.com/abstract=2530118

Juan Delgado (Contact Author)

GAMES Economics ( email )

Calle Manzana 7
Madrid, 28015
Spain

HOME PAGE: http://https://gamesecon.com/juan-delgado/

Universidad Carlos III de Madrid - Economics Dpt. ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

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