VON NEUMANN AND MORGENSTERN STABLE SETS IN A COURNOT MERGER SYSTEM

We address the problem of endogenous coalition formation in Cournot oligopoly markets. The formation of coalitions is formalised as an abstract system where the elements of the abstract set are derived from a valuation function and the dominance relation specifies the rules of coalition formation. We focus on a particular instance of this approach: Market structure determination under Cournot competition, and in the resulting Cournot merger system we find von Neumann and Morgenstern stable sets.