cooperative games, partition function form games, solution concepts, core, bargaining set

An oligopoly is a market where a couple of large producers supply some goods. If the oligopoly is collusive, the producers form coalitions. Then, within each of the coalitions, the producers wish to divide their total profit among themselves. They could use a cooperative transferable utility game solution concept, such as the core, if the game were in the coalitional form. This, however, is not the case. In this paper, we propose an approach to overcome that difficulty: converting the collusive oligopoly into the partition function form, we show how the known cooperative game solution concepts (core, bargaining set) can be applied to that game. Actually, the proposed approach is suitable not only for a collusive oligopoly, but, under some assumptions, for any cooperative strategic form game.