Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function Approach
In this paper, we use a partition function form game to analyze cartel formation among firms in Cournot competition. We assume that a firm obtains a certain cost advantage that allows it to produce goods at a lower unit cost. We show that if the level of the cost advantage is “moderate”, then the fi...
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| Format: | Article |
| Language: | English |
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MDPI AG
2021-02-01
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| Series: | Games |
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| Online Access: | https://www.mdpi.com/2073-4336/12/1/14 |
| _version_ | 1827605166373732352 |
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| author | Takaaki Abe |
| author_facet | Takaaki Abe |
| author_sort | Takaaki Abe |
| collection | DOAJ |
| description | In this paper, we use a partition function form game to analyze cartel formation among firms in Cournot competition. We assume that a firm obtains a certain cost advantage that allows it to produce goods at a lower unit cost. We show that if the level of the cost advantage is “moderate”, then the firm with the cost advantage leads the cartel formation among the firms. Moreover, if the cost advantage is relatively high, then the formed cartel can also be stable in the sense of the core of a partition function form game. We also show that if the technology for the low-cost production can be copied, then the cost advantage may prevent a cartel from splitting. |
| first_indexed | 2024-03-09T06:15:50Z |
| format | Article |
| id | doaj.art-9ae5881205a24c4bb78e57b53871f987 |
| institution | Directory Open Access Journal |
| issn | 2073-4336 |
| language | English |
| last_indexed | 2024-03-09T06:15:50Z |
| publishDate | 2021-02-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Games |
| spelling | doaj.art-9ae5881205a24c4bb78e57b53871f9872023-12-03T11:53:53ZengMDPI AGGames2073-43362021-02-011211410.3390/g12010014Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function ApproachTakaaki Abe0School of Political Science and Economics, Waseda University, 1-6-1, Nishi-waseda, Shinjuku-ku, Tokyo 169-8050, JapanIn this paper, we use a partition function form game to analyze cartel formation among firms in Cournot competition. We assume that a firm obtains a certain cost advantage that allows it to produce goods at a lower unit cost. We show that if the level of the cost advantage is “moderate”, then the firm with the cost advantage leads the cartel formation among the firms. Moreover, if the cost advantage is relatively high, then the formed cartel can also be stable in the sense of the core of a partition function form game. We also show that if the technology for the low-cost production can be copied, then the cost advantage may prevent a cartel from splitting.https://www.mdpi.com/2073-4336/12/1/14cartel formationCournot competitionpartition function form gamestability |
| spellingShingle | Takaaki Abe Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function Approach Games cartel formation Cournot competition partition function form game stability |
| title | Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function Approach |
| title_full | Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function Approach |
| title_fullStr | Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function Approach |
| title_full_unstemmed | Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function Approach |
| title_short | Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function Approach |
| title_sort | cartel formation in cournot competition with asymmetric costs a partition function approach |
| topic | cartel formation Cournot competition partition function form game stability |
| url | https://www.mdpi.com/2073-4336/12/1/14 |
| work_keys_str_mv | AT takaakiabe cartelformationincournotcompetitionwithasymmetriccostsapartitionfunctionapproach |