Stable Coalition Structures in Dynamic Competitive Environment
We consider a finite horizon dynamic competition model in discrete time in which firms are not restricted from cooperation with each other and can form coalitions of any size. For every coalition of firms, we determine profits of its members by two approaches: without the redistribution of profits inside the coalition and with such redistribution using a solution from cooperative game theory. Next, for each approach we examine the stability of a coalition structure in the game. When we find a stable coalition structure, we then verify whether it is dynamically stable, that is, stable over time with respect to the same profit distribution method chosen in the initial time period.
KeywordsDynamic competition Coalition structure Stability
This research was supported by the Russian Science Foundation under grant No. 17-11-01079.
- Carlson, D. A., & Leitmann, G. (2005). The direct method for a class of infinite horizon dynamic games. In C. Deissenberg & R. F. Hartl (Eds.), Optimal control and dynamic games. Advances in computational management science (Vol. 7, pp. 319–334). Boston, MA: Springer.Google Scholar
- Parilina, E., & Sedakov, A. (2014). Stable bank cooperation for cost reduction problem. The Czech Economic Review, 8(1), 7–25Google Scholar
- Sedakov, A., Parilina, E., Volobuev, Yu., & Klimuk, D. (2013). Existence of stable coalition structures in three-person games. Contributions to Game Theory and Management, 6, 407–422.Google Scholar
- Shapley, L. S. (1953). A value for n-person games. In H. W. Kuhn & A. W. Tucker (Eds.), Contributions to the theory of games (Vol. II, pp. 307–317). Princeton: Princeton University Press.Google Scholar
- Sun, F., & Parilina, E. (2018). Existence of stable coalition structures in four-person games. Contributions to Game Theory and Management, 11, 224–248.Google Scholar