<p><?tk 2?>In competitive markets, the presence of positive externalities weakens the incentive of firms to engage in stable coalition formation, leading to coordination inefficiencies and lower cost efficiency, which in turn undermines their market competitiveness. To address this issue, this paper employs a Cournot framework to explore the mechanisms of coalition formation and identify the conditions that facilitate coalition stability. We build a Cournot oligopoly setting with asymmetric costs and precedent constraints, assuming transferable technology and transferable utility within the coalition. Our result identify an optimal order in which firms join sequentially in decreasing order of marginal costs. Building on this optimal order, we characterize an asymmetric cost structure based on the cost difference between adjacent firms, which ensures the profitability of an ordered constrained coalition. Furthermore, we define the requirements for anti-split and anti-merger to characterize the stability of an ordered constrained coalition. To achieve this, we employ the proportional allocation rule to allocate the worth of an ordered constrained coalition among its members and further specify the cost difference between adjacent firms. Consequently, we provide an asymmetric cost structure based on the cost difference between adjacent firms, which guarantees the formation and stability of an ordered constrained coalition.</p>

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Formation of an ordered constrained coalition in Cournot oligopoly setting with precedence constraints

  • Jing Ren,
  • Hao Sun,
  • Weibin Han

摘要

In competitive markets, the presence of positive externalities weakens the incentive of firms to engage in stable coalition formation, leading to coordination inefficiencies and lower cost efficiency, which in turn undermines their market competitiveness. To address this issue, this paper employs a Cournot framework to explore the mechanisms of coalition formation and identify the conditions that facilitate coalition stability. We build a Cournot oligopoly setting with asymmetric costs and precedent constraints, assuming transferable technology and transferable utility within the coalition. Our result identify an optimal order in which firms join sequentially in decreasing order of marginal costs. Building on this optimal order, we characterize an asymmetric cost structure based on the cost difference between adjacent firms, which ensures the profitability of an ordered constrained coalition. Furthermore, we define the requirements for anti-split and anti-merger to characterize the stability of an ordered constrained coalition. To achieve this, we employ the proportional allocation rule to allocate the worth of an ordered constrained coalition among its members and further specify the cost difference between adjacent firms. Consequently, we provide an asymmetric cost structure based on the cost difference between adjacent firms, which guarantees the formation and stability of an ordered constrained coalition.