Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/257496 
Authors: 
Year of Publication: 
2021
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 12 [Issue:] 1 [Article No.:] 14 [Publisher:] MDPI [Place:] Basel [Year:] 2021 [Pages:] 1-16
Publisher: 
MDPI, Basel
Abstract: 
In this paper, we use a partition function form game to analyze cartel formation among firms in Cournot competition. We assume that a firm obtains a certain cost advantage that allows it to produce goods at a lower unit cost. We show that if the level of the cost advantage is "moderate", then the firm with the cost advantage leads the cartel formation among the firms. Moreover, if the cost advantage is relatively high, then the formed cartel can also be stable in the sense of the core of a partition function form game. We also show that if the technology for the low-cost production can be copied, then the cost advantage may prevent a cartel from splitting.
Subjects: 
cartel formation
Cournot competition
partition function form game
stability
JEL: 
C71
L13
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
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