Cooperation and Efficiency in Markets deals with collusion between firms on both sides of a market that is immune to deviations by coalitions. The book studies this issue using an infinitely countably repeated game with discounting of future single period payoffs.
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)
1 Introduction
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1.1 Choice of Solution Concepts
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1.2 Choice of Non-collusive Benchmarks
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1.3 Mathematical Notations
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References
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2 Model
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2.1 Stage Game
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2.2 Repeated Game
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2.3 Solution Concepts
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References
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3 Existence of an SRPE and an SSPE
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3.1 Existence of an SRPE
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3.2 Existence of an SSPE
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4 Efficiency of an SRPE and an SSPE
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4.1 Natural Oligopoly
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4.2 Natural Oligopsony
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4.3 Impact on Consumer Welfare
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4.3.1 Comparison with a Monopsonist Choosing the Traded Quantities on the Demand Side and Price Taking Behavior on the Supply Side of the Analyzed Market
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4.3.2 Comparison with Price Taking Behavior on the Demand Side and a Cournot Oligopoly on the Supply Side of the Analyzed Market
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References
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5 Afterword
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References
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Index
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Milan Horniaek 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.
