Impact of equity and equality on stability and collusion in a decentralized network

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• 作者：Omkar D. Palsule-Desai
• 关键词：Equity ; Equality ; Competition ; Stability ; Collusion
• 刊名：Annals of Operations Research
• 出版年：2016
• 出版时间：March 2016
• 年：2016
• 卷：238
• 期：1-2
• 页码：411-447
• 全文大小：922 KB
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• 作者单位：Omkar D. Palsule-Desai (1)
  
  1. Indian Institute of Management Indore, Block III, Ground Floor, Prabandh Shikhar, Rau Pithampur Road, Indore, 453 556, India
  
• 刊物类别：Business and Economics
• 刊物主题：Economics
  Operation Research and Decision Theory
  Combinatorics
  Theory of Computation
  
• 出版者：Springer Netherlands
• ISSN：1572-9338

文摘

We develop a noncooperative game theoretic model to examine network performance and stability related implications of allocation mechanisms that endogenously balance equity vis-à-vis equality, and hence, the degree of collusion among the network firms in a decentralized setting. We obtain the structural results and bounds for our model parameters in this regard by focusing on two important factors: (i) synergy between the firms, and (ii) the number of network firms. Our contribution to the existing literature is threefold in showing that: (i) perfect equality among the network firms can be suboptimal, (ii) explicit cooperation among the firms is not always necessary for the efficient network performance, and (iii) the network firms do not completely collude, and yet, network stability can be enhanced. By particularly modeling a two-tier network, we exhibit our results in a decentralized setting and highlight the role of a coordinating agent in enhancing competitiveness of the network firms. We demonstrate that inefficiencies and instability of decentralization can be eliminated by incorporating an additional degree of freedom in the network formation game. Our model and the structural results are applicable to networks such as producers’ cooperatives, cartels, exclusive production facilities, industrial clusters, joint production and research facilities, etc., wherein the conflicts of equity–equality and degree of collusion are predominant.