Much of modern microeconomics and industrial economics is based on
game theory. In this chapter we look at oligopolistic models where firms may cooperate
and form coalitions. Apart from R & D and export cooperations, cooperations
in industrial clusters or for standardisation, public policy opposes the formation of
cartels and trusts and fosters competition instead. Do players want merge to form
larger and larger firms? According to the cooperative models we present here, the
trade-off between efficiency gains driving mergers and the temptation to free-ride
are not trivial. We show that the monopoly does not normally form, but typically
multiple coalitions coexist.
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