Abstract
Formation of coalitions in oligopolies is modeled as a noncooperative game in which firms' strategies have a binary form (to cooperate or not). The author demonstrates a one-to-one correspondence between stable cartels defined by C. d'Aspremont et al. (1983) and the Nash equilibria of this game. Using a 'coalition-proof Nash equilibrium,' they define the concept of a coalition-proof stable cartel and prove that there is a unique equilibrium.
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