INSTITUTE OF MATHEMATICAL ECONOMICS

Joachim Rosenmüller Peter Sudhölter

Working-Paper No. 319

September 2000

Abstract

We discuss market games or linear production games with a large but finite sets of agents. The representing distributions of initial assignments are assumed to be uniform distributions with disjoint carriers. Thus the agents decompose into finitely many disjoint groups each of which holds a corner of the market. Following a paper of Hart we argue that the formation of cartels should be explained endogeneously. Accordingly, we exhibit a solution concept which not only predicts cartelization but also explains the profits of the long side by its preventive power. This concept is the modified nucleolus or modiclus.

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