Competition and networks of collaboration

Abstract

I develop a model of collaboration between tournament participants in which agents collaborate in pairs, and an endogenous structure of collaboration is represented by a weighted network. The agents are forward-looking and capable of coordination; they value collaboration with others and higher tournament rankings. I use von Neumann-Morgenstern stable sets as a solution. I find stable networks in which agents collaborate only within exclusive groups. Both an absence of intergroup collaboration and excessive intragroup collaboration lead to inefficiency. I provide a necessary and sufficient condition for the stability of efficient outcomes in winner-takes-all tournaments. I show that the use of transfers does not repair efficiency.

Network formation with myopic and farsighted players

“…Herings et al (2017b) define first the myopic-farsighted stable set for two-sided matching problems, andMauleon et al (2018b) extend it to R&D network formation with pairwise deviations. 4 SeeChwe (1994),Herings et al (2009),Mauleon et al (2011), Vohra (2015, 2019),Roketskiy (2018) for definitions of the farsighted stable set. Alternative notions of farsightedness are suggested byDiamantoudi and Xue (2003),Dutta et al (2005),Dutta and Vohra (2017),Herings et al (2004Herings et al ( , 2019,Page et al (2005),Page and Wooders (2009),Xue (1998) among others.…”

Network Formation with Myopic and Farsighted Players

“…Herings et al (2017b) define first the myopic-farsighted stable set for two-sided matching problems, andMauleon et al (2018b) extend it to R&D network formation with pairwise deviations.4 SeeChwe (1994),Herings et al (2009),Mauleon et al (2011), Vohra (2015, 2019),Roketskiy (2018) for definitions of the farsighted stable set. Alternative notions of farsightedness are suggested byDiamantoudi and Xue (2003),Dutta et al (2005),Dutta and Vohra (2017), Herings et al (2004,Page et al (2005),Page and Wooders (2009), Xue (1998) among others.…”

Contractually Stable Alliances

“…Espinosa and Macho‐Stadler () have analyzed the formation of associations of firms when effort to reduce costs is not verifiable. Roketskiy () has developed a model of collaboration between farsighted firms competing in a tournament. Firms collaborate in pairs, and a structure of collaboration is represented by a network.…”