Abstract
In order to analyse the stability of cartel structures in a Cournot oligopoly, I propose a noncooperative game of coalition formation in which any group of firms can induce a dismantling deviation such that each member is in a smaller cartel in the resulting structure. It is required that a deviation only occurs if it is robust against further dismantling deviation. I characterize the set of stable cartel structures called the Just Profitable Cartel Structures (JPCS), which depends on the total number of firms. Different kind of JPCS are stable with different numbers of cartels.
I thank Louis-André Gérard-Varet, Alan Kirman, and Hervé Moulin for helpful discussions about a previous version of the paper, and Francis Bloch for his juidicious comments which allowed me to considerably improve this version.
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Thoron, S. (2003). Stable Cartel Structures in a Dismantling Game. In: Sertel, M.R., Koray, S. (eds) Advances in Economic Design. Studies in Economic Design. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-05611-0_13
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DOI: https://doi.org/10.1007/978-3-662-05611-0_13
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