Resumen de Stability of Cartels and the Incentive of Merger in Oligopoly Situations without Transfer
Holger Meinhardt, Theo S.H. Driessen
The paper studies the stability of cartels and the incentives for horizontal mergers of the class of oligopoly situations without transferable technologies.
When dealing with oligopoly situations the usual prediction is that firms, which reached an explicit or implicit agreement have an incentive to cheat and to deviate from the agreement. In contrast to the predicted instability of cartels there is empirical evidence that firms stick to a cooperative arrangement on price or output decisions despite of the incentive scheme.
But if we want to know why cartels operate successfully in many situations, we have to look at cooperative solution concepts which give us an answer. By doing so, we can present sufficient conditions involving the inverse demand function and the cost functions to establish the convexity for the class of oligopoly TU-games without transferable technologies. Convexity of oligopoly TU-games with transferable technologies has been first studied by Zhao (1999) for the case of a linear inverse demand function and linear cost functions. Zhao has provided necessary and sufficient conditions to establish the convexity property for these game types. Although, these games are not convex in general, they are totally balanced as has been worked out by Norde Do and Tijs (2002). Furthermore, it has been shown by Norde et al. (2002) that oligopoly TU-games without transferable technologies are convex for the special case of a linear inverse demand function and linear cost functions. Following this non-synergy approach we can derive for the most general case economically meaningful conditions concerning the shape of the individual costs, the average costs for various coalitions and the individual marginal revenues under which an oligopoly TU-game is convex.
