Sequential Formation of Coalitions through Bilateral Agreements

Nicolás Porteiro, David Pérez-Castrillo and Ines Macho-Stadler
Authors registered in the RePEc Author Service: David Perez-Castrillo

No 84, Working Papers from Barcelona School of Economics

Abstract: We study a sequential protocol of endogenous coalition formation based on a process of bilateral agreements among the players. We apply the game to a Cournot environment with linear demand and constant average costs. We show that the final outcome of any Subgame Perfect Equilibrium of the game is the grand coalition, provided the initial number of firms is high enough and they are sufficiently patient.

Keywords: Coalition formation; bilateral agreements; cournot (search for similar items in EconPapers)
JEL-codes: C72 D40 D62 (search for similar items in EconPapers)
Date: 2015-09
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Related works:
Working Paper: Sequential Formation of Coalitions through Bilateral Agreements (2002)
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