36-

Details of the hierarchy of coalitions which might be the result of finas

attempting to minimise their costs under these conditions are shown in Table 3

and Figure lé.

Coalition Size

Marginal firms in each coalition by the number* of the firms optimal coalition size*

Costs of the marginal firms in each coalition as a proportion of their optimal costs

Characteristics of Coalitions

1.0

Figure 16

May 25th I97I

Table 3

A Hierarchy of Coalitions (Model 2)

- 37 - Evans

The most interesting feature of the second model as compared with the

first is that the costs of the marginal firms do not diverge by increasing

amounts from the optimum as the size of their coalition increases. Despite the

existence of a hierarchy of coalitions in which each coalition is three times

the size of the next largest, no finite costs are greater than fifty per cent

above the minimum.