Networks of Collaboration in Oligopoly

Sanjeev Goyal and Sumit Joshi ()
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Sumit Joshi: George Washington University

No 00-092/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In an oligopoly, prior to competing in the market, firms have an opportunity to form pair-wisecollaborative links with other firms. These pair-wise links involve a commitment of resources andlead to lower costs of production of the collaborating firms. The collection of pair-wise linksdefines a collaboration network. We study the architecture of strategically stable networks.Our analysis reveals that in a setting where firms are ex-ante identical, strategically stablenetworks are often asymmetric, with some firms having a large number of links while others havefew links or no links at all. We characterize such asymmetric networks; the dominant grouparchitecture, stars, and inter-linked stars are found to be stable. In asymmetric networks, thefirms with many links have lower costs of production as compared to firms with few links. Thuscollaboration links can have a major influence on the functioning of the market.

Date: 2000-11-10
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Networks of collaboration in oligopoly (2003)
Working Paper: Networks of Collaboration in Oligopoly (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20000092

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