A Sequential Approach to the Characteristic Function and the Core in Games with Externalities
FEEM Working Paper No. 11.2001
Springer Verlag, ADVANCES IN ECONOMIC DESIGN, S. Koray, M.R. Sertel, eds., pp. 233-250, Berlin & London, 2003
20 Pages Posted: 7 Jul 2001
Date Written: January 2001
Abstract
This paper proposes a formulation of coalitional payoff possibilities in games with externalities, based on the assumption that forming coalitions can exploit a first mover advantage. We derive a characteristic function and show that when outside players play their best response noncooperatively, the core is always nonempty when the game has strategic complementarities. We apply this result to cartel formation in Bertrand oligopoly and in Shapley-Shubik (1977) strategic market games.
Keywords: core, cooperative games, externalities
JEL Classification: C7
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
A Conjectural Cooperative Equilibrium in Strategic Form Games
By Marco A. Marini and Sergio Currarini
-
Coalition Formation in Games Without Synergies
By Sergio Currarini and Marco A. Marini
-
Merger Without Cost Advantages
By Steffen Huck, Kai A. Konrad, ...
-
The Kinked Demand Model and the Stability of Cooperation
By Marco A. Marini and Sergio Currarini
-
The Strategic Timing of R&D Agreements
By Marco A. Marini, Maria Luisa Petit, ...
-
Lead, Follow or Cooperate? Endogenous Timing & Cooperation in Symmetric Duopoly Games
By Marco A. Marini and Giorgio Rodano
-
Coalitional Approaches to Collusive Agreements in Oligopoly Games
By Sergio Currarini and Marco A. Marini