TY - JOUR
T1 - Cooperative behavior in a competitive market
AU - Mirman, Leonard J.
AU - Tauman, Yair
AU - Zang, Israel
N1 - Funding Information:
We would like to thank an anonymous referee for very helpful comments and to acknowledge partial support from the NSF through grant SES-81-06207, The Israel Foundation Trustees, and the Israel Institute for Business Research at Tel Aviv University.
PY - 1991/10
Y1 - 1991/10
N2 - We study the merger of firms producing a homogeneous product in a competitive environment. We consider an industry in which the producing agents consist of a set of identical competitive firms, and another set of firms endowed with inputs (characteristics), for which there is market failure. Experience, management skills or marketing skills are examples of such characteristics. We provide sufficient conditions under which such cooperation is possible. Cooperation will not emerge unless each firm is better off by cooperating. We pose this issue as a cooperative profit game and derive conditions for economies of cooperation, guaranteeing non-emptiness of its core. It is also shown that under these conditions the core contains the Shapley value and Aumann-Shapley imputations.
AB - We study the merger of firms producing a homogeneous product in a competitive environment. We consider an industry in which the producing agents consist of a set of identical competitive firms, and another set of firms endowed with inputs (characteristics), for which there is market failure. Experience, management skills or marketing skills are examples of such characteristics. We provide sufficient conditions under which such cooperation is possible. Cooperation will not emerge unless each firm is better off by cooperating. We pose this issue as a cooperative profit game and derive conditions for economies of cooperation, guaranteeing non-emptiness of its core. It is also shown that under these conditions the core contains the Shapley value and Aumann-Shapley imputations.
KW - Aumann-Shapley imputations
KW - Competitive environment
KW - Shapley value
KW - market
UR - http://www.scopus.com/inward/record.url?scp=1942433863&partnerID=8YFLogxK
U2 - 10.1016/0165-4896(91)90001-8
DO - 10.1016/0165-4896(91)90001-8
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AN - SCOPUS:1942433863
SN - 0165-4896
VL - 22
SP - 105
EP - 121
JO - Mathematical Social Sciences
JF - Mathematical Social Sciences
IS - 2
ER -