The core in an oligopoly market with indivisibility (Q1580790)

The paper deals with the application of core theory to the empirical study of an oligopoly market with indivisibility. The industries considered by the author belong to the class of oligopoly markets with indivisibility, which includes industries with a small numbers of high-price outputs or operated by a small number of large orders. Due to indivisibility and small market size, a one-unit change in demand or in supply may have a non-negligible effect on the market equilibrium. Necessary and sufficient conditions for the existence of a core in a general \(m\)-buyer \(n\)-seller market with indivisibility are provided. When costs are dominated by opportunity costs (the firms' variable costs are sufficiently small), the core condition can be characterized by the primitive market parameters. In a 3-2 market with opportunity costs, the core is non-empty if and only if the larger seller's opportunity cost is either sufficiently large or sufficiently small.