Subgame-perfect market sharing agreements

Jackson and Watts (2002, J Econ Theory) study a dynamic process of network formation assuming that each player is myopic. In this note, we study the same dynamic process but assume that each player is farsighted. In particular, we consider a finite-horizon version of such a dynamic process in a model of market sharing agreements introduced by Belleframme and Bloch (2004, Int Econ Review), and investigate which networks are likely to be realized when the number of the players is three.