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Networks of Collaboration in Multi-market Oligopolies

Billand, Pascal and Bravard, Christophe and Chakrabarti, Subhadip and Sarangi, Sudipta (2010): Networks of Collaboration in Multi-market Oligopolies.

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Abstract

The result that firms competing in a Cournot oligopoly with pairwise collaboration form a complete network under zero or negligible link formation costs provided by Goyal and Joshi (2003) no longer hold in multi-market oligopolies. Link formation in one market affects a firm’s profitability in another market in a possibly negative way resulting in the fact that it is no longer always profitable in an unambiguous manner. With non-negative link formation costs, the stable networks have a dominant group architecture and efficient networks are charecterized by at most one non-singleton component with a geodesic distance between players that is less than three.

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