The δ-core and Stable Partitions in Asymmetric Oligopolies

This paper solves merger formation problem in Cournot oligopolies by a cooperative and computational approach. In three-firm linear oligopolies, monopoly will be formed (or be stable) if its merging cost is sufficiently low and cost differentials are sufficiently large. When monopoly is unprofitable due to high merging costs, a profitable two-member merger will be formed if its efficient member receives a sufficiently large share of the merger’s gain and cost differentials are sufficiently small. In n-firm linear oligopolies, monopoly will be formed if number of firms and merging costs both are sufficiently small and cost differentials are sufficiently large. JEL Classification Number: C62, C71, C72, D43, L10