Cooperation and efficiency in markets
type: Item
instance of: scholarly article
title: Cooperation and efficiency in markets
zbMATH Open document ID: 1223.91001
DOI: 10.1007/978-3-642-19763-5
author: Milan Horniaček
published in: Lecture Notes in Economics and Mathematical Systems
publication date: 2011-03-31T00:00:00Z
review text: 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 author proves (1) a sufficient condition for the existence of an equilibrium, (2) efficiencies of the equilibria (no waste of resources), (3) a condition for welfare economics. The book shows that all continuation equilibrium payoff vectors are strictly Pareto efficient and natural oligopoly. The grand coalition can weak Pareto improve the vector of payoffs in the repeated game by abandoning the punishment. Thus, the equilibrium strategy profile proposed in this book would not be renegotiation-proof. \textit{A. Rubinstein} [``Strong perfect equilibrium in supergames'', Int. J. Game Theory 9, 1--12 (1980; Zbl 0433.90093)] developed a strong perfect equilibrium solution for infinite horizon noncooperative games that take into account deviations by all coalitions without imposing restrictions either on the strategies of individual player or on the strategy profiles to which a coalition can deviate. This is an application of Aumann's concept of a strong Nash equilibrium for strategic form noncooperative games to supergames. A strong perfect equilibrium fails to exist if the weak Pareto efficient frontier of the set of individual rational stage game payoff vectors has no sufficiently large flat portion. The model in this book does not have this weak Pareto efficient frontier, it is strictly Pareto efficient. The solution concepts for supergames take into account only the deviations by the grand coalition. The strict renegotiation-proof equilibrium is a subgame perfect equilibrium with the property that the grand coalition cannot weakly Pareto improve the vector of continuation payoffs in any subgame. \textit{J. Farrell} and \textit{E. Maskin} [``Renegotiation in repeated games'', Games Econ. Behav. 1, No. 4, 327--360 (1989; Zbl 0754.90082)] in…
Mathematics Subject Classification ID: 91-02
Mathematics Subject Classification ID: 91A20
Mathematics Subject Classification ID: 91A80
Mathematics Subject Classification ID: 91B26
Mathematics Subject Classification ID: 91B54
zbMATH DE Number: 5872940
zbMATH Keywords: supergame
zbMATH Keywords: oligopoly
zbMATH Keywords: weak Pareto efficient frontier
zbMATH Keywords: strong perfect equilibrium
zbMATH Keywords: strict renegotiation-proof equilibrium
zbMATH Keywords: strict strong perfect equilibrium
zbMATH Keywords: strategy profile
zbMATH Keywords: Cournot oligopoly
zbMATH Keywords: antitrust policy
zbMATH Keywords: competition policy
MaRDI profile type: Publication
full work available at URL: https://doi.org/10.1007/978-3-642-19763-5
OpenAlex ID: W4254609659
description: scientific article; zbMATH DE number 5872940