nep-ind New Economics Papers
on Industrial Organization
Issue of 2010‒12‒18
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Cournot oligopoly interval games By Aymeric Lardon
  2. Convexity of Bertrand oligopoly TU-games with differentiated products By Aymeric Lardon
  3. Buyer Power and Price Discrimination: The Case of the UK Care Homes Market By Hancock R; Hviid M

  1. By: Aymeric Lardon (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: In this paper we consider cooperative Cournot oligopoly games. Following Chander and Tulkens (1997) we assume that firms react to a deviating coalition by choosing individual best reply strategies. Lardon (2009) shows that if the inverse demand function is not differentiable, it is not always possible to define a Cournot oligopoly TU(Transferable Utility)-game. In this paper, we prove that we can always specify a Cournot oligopoly interval game. Furthermore, we deal with the problem of the non-emptiness of two induced cores: the interval gamma-core and the standard gamma-core. To this end, we use a decision theory criterion, the Hurwicz criterion (Hurwicz 1951), that consists in combining, for any coalition, the worst and the better worths that it can obtain in its worth interval. The first result states that the interval gamma-core is non-empty if and only if the oligopoly TU-game associated with the better worth of every coalition in its worth interval admits a non-empty gamma-core. However, we show that even for a very simple oligopoly situation, this condition fails to be satisfied. The second result states that the standard gamma-core is non-empty if and only if the oligopoly TU- game associated with the worst worth of every coalition in its worth interval admits a nonempty gamma-core. Moreover, we give some properties on every individual profit function and every cost function under which this condition always holds, what substantially extends the gamma-core existence results in Lardon (2009).
    Keywords: Cournot oligopoly interval game; Interval gamma-core; Standard gamma-core; Hurwicz criterion;
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:hal:journl:halshs-00544044_v1&r=ind
  2. By: Aymeric Lardon (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: In this article we consider Bertrand oligopoly TU-games with differentiated products. We assume that the demand system is Shubik's (1980) and that firms operate at a constant and identical marginal and average cost. First, we show that the alpha and beta- characteristic functions (Aumann 1959) lead to the same class of Bertrand oligopoly TU-games and we prove that the convexity property holds for this class of games. Then, following Chander and Tulkens (1997) we consider the gamma-characteristic function where firms react to a deviating coalition by choosing individual best reply strategies. For this class of games, we show that the Equal Division Solution belongs to the core and we provide a sufficient condition under which such games are convex.
    Keywords: Bertrand oligopoly TU-games; Core; Convexity; Equal Division Solution
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:hal:journl:halshs-00544056_v1&r=ind
  3. By: Hancock R (School of Medicine, Health Policy and Practice, University of East Anglia); Hviid M (UEA Law School and ESRC Centre for Competition Policy)
    Abstract: UK Local Authorities purchase care home places on behalf of a large group of people following a means test of their income and wealth. All other buyers of care home services are atomistic. The care home market is characterised by a large number of small providers. Local authorities may thus have buyer power. We show that any abuse of this buyer power may lead to some people, “the squeezed middle” not being served. We quantify the size of the squeezed middle and assess the implications of the form of the means test for local authorities' ability to exercise buyer power.
    Date: 2010–12–13
    URL: http://d.repec.org/n?u=RePEc:ese:iserwp:2010-39&r=ind

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