Core Existence in Vertically Differentiated Markets

Gabszewicz, Jean and Marini, Marco A. and Tarola, Ornella (2016): Core Existence in Vertically Differentiated Markets. Published in: Economics Letters , Vol. 149, : pp. 28-32.

Abstract

We prove that a sufficient condition for the core existence in a n-firm vertically differentiated market is that the qualities of firms' products are equispaced along the quality spectrum. This result contributes to see that a fully collusive agreement among firms in such markets is more easily reachable when product qualities are not distributed too asymmetrically along the quality ladder.

• Item Type: MPRA Paper
• Language: English
• Keywords: Vertically Differentiated Markets; Price Collusion; Core; Grand Coalition; Coalition Stability; Games with Externalities; Partition Function Games.
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C71 - Cooperative Games; D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; D - Microeconomics > D4 - Market Structure, Pricing, and Design; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets

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