Stable Trading Structures in Bilateral Oligopolies

Francis Bloch and Sayantan Ghosal

No 1994056, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper analyses the formation of trading groups in a bilateral market with strategic traders. A trading structure (a partition of the set of traders into trading groups) is strongly stable if no coalition of traders can deviate and increase the utility of some of its members while making no other member worse off. It is weakly stable if no coalition of traders can deviate and make all its members strictly better off. The only strongly stable trading structure is the grand coalition, where all agents trade on the same market. Other weakly stable trading structures exist and are characterized by a strong ordering property: trading groups can be ranked by size and cannot contain very different numbers of traders of the two types. In the particular example where traders have log-linear utility functions, the set of weakly stable trading structures is completely characterized.

JEL-codes: D43 D51 (search for similar items in EconPapers)
Date: 1994-10-01
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Stable Trading Structures in Bilateral Oligopolies (1997)
Working Paper: Stable Trading Structures in Bilateral Oligopolies (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1994056

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