Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2000-11-10
Number: 00-092/1
Author-Name: Sanjeev Goyal
Author-Email: goyal@few.eur.nl
Author-Workplace-Name: Erasmus University Rotterdam
Author-Name: Sumit Joshi
Author-Email: sumjos@gwu.edu
Author-Workplace-Name: George Washington University
Title: Networks of Collaboration in Oligopoly
Abstract: In an oligopoly, prior to competing in the market, firms have an opportunity to form pair-wisecollaborative links with other firms. These pair-wise links involve a commitment of resources andlead to lower costs of production of the collaborating firms. The collection of pair-wise linksdefines a collaboration network. We study the architecture of strategically stable networks.Our analysis reveals that in a setting where firms are ex-ante identical, strategically stablenetworks are often asymmetric, with some firms having a large number of links while others havefew links or no links at all. We characterize such asymmetric networks; the dominant grouparchitecture, stars, and inter-linked stars are found to be stable. In asymmetric networks, thefirms with many links have lower costs of production as compared to firms with few links. Thuscollaboration links can have a major influence on the functioning of the market.
File-Url: https://papers.tinbergen.nl/00092.pdf
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Handle: RePEc:tin:wpaper:20000092