Discussion paper

DP12194 Competition and Networks of Collaboration

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 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.

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Citation

Roketskiy, N (2017), “DP12194 Competition and Networks of Collaboration”, CEPR Press Discussion Paper No. 12194. https://cepr.org/publications/dp12194