Large Newsvendor Games

Luigi Montrucchio and Marco Scarsini

No 15, Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: We consider a game, called newsvendor game, where several retailers, who face a random demand, can pool their resources and build a centralized inventory that stocks a single item on their behalf. Profits have to be allocated in a way that is advantageous to all the retailers. A game in characteristic form is obtained by assigning to each coalition its optimal expected profit. A similar game (modeled in terms of costs) was considered by Muller et al. (2002), who proved that this game is balanced for every possible joint distribution of the random demands. In this paper we consider newsvendor games with possibly an infinite number of newsvendors. We prove in great generality results about balancedness of the game, and we show that in a game with a continuum of players, under a nonatomic condition on the demand, the core is a singleton. For a particular class of demands we show how the core shrinks to a singleton when the number of players increases.

Keywords: newsvendor games; nonatomic games; core; balanced games. (search for similar items in EconPapers)
JEL-codes: C71 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2005
New Economics Papers: this item is included in nep-gth
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Citations:

Forthcoming in Games and Economic Behavior

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Related works:
Journal Article: Large newsvendor games (2007)
Working Paper: Large newsvendor games (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:15

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