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Cooperation and Efficiency in Markets

  • Book
  • © 2011

Overview

Authors:
  1. Milan Horniacek

    1. Faculty of Social and Economic Sciences, Institute of Public Policy, Comenius University, Bratislava, Slovakia

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  • The unified analysis of existence and efficiency properties of equilibria provides justification for economic policy reforms
  • The analysis of cooperative managerial capitalism is interesting for economic historians
  • The analysis of inter-firm cooperation without long term contracts is applicable in management and business law
  • Includes supplementary material: sn.pub/extras

Part of the book series: Lecture Notes in Economics and Mathematical Systems (LNE, volume 649)

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Table of contents (5 chapters)

  1. Front Matter

    Pages i-vii
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  2. Introduction

    • Milan Horniaček
    Pages 1-7

  3. Model

    • Milan Horniaček
    Pages 9-19

  4. Existence of an SRPE and an SSPE

    • Milan Horniaček
    Pages 21-52

  5. Efficiency of an SRPE and an SSPE

    • Milan Horniaček
    Pages 53-83

  6. Afterword

    • Milan Horniaček
    Pages 85-90

  7. Back Matter

    Pages 91-92
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Keywords

About this book

The book deals with collusion between firms on both sides of a market that is immune to deviations by coalitions. We study this issue using an infinitely countably repeated game with discounting of future single period payoffs. A strict strong perfect equilibrium is the main solution concept that we apply. It requires that no coalition of players in no subgame can weakly Pareto improve the vector of continuation average discounted payoffs of its members by a deviation. If the sum of firms' average discounted profits is maximized along the equilibrium path then the equilibrium output of each type of good is produced with the lowest possible costs. If, in addition, all buyers are retailers (i.e., they resell the goods purchased in the analyzed market in a retail market) then the equilibrium vector of the quantities sold in the retail market is sold with the lowest possible selling costs. We specify sufficient conditions under which collusion increases consumer welfare.

Reviews

From the reviews:

“The book under review studies the theory of repeated games in oligopoly theory and analyzes countably infinite repetition (or supergame) of interactions between firms on both sides of a market with dicounting of future profits. … The results of the book may be useful in adjusting antitrust policy and competition policy in the world.” (Weiping Li, Zentralblatt MATH, Vol. 1223, 2011)

Authors and Affiliations

  • Faculty of Social and Economic Sciences, Institute of Public Policy, Comenius University, Bratislava, Slovakia

    Milan Horniacek

About the author

Milan Horniaček is currently an Associate Professor of Economics at the Institute of Public Policy and Economics of the Faculty of Social and Economic Sciences of the Comenius University in Bratislava. His research interests include non-cooperative game theory, industrial organization, antitrust policy and microeconomic theory. The analysis of equilibria in infinite horizon non-cooperative games that are immune to deviations by coalitions is the most important part of his research.

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