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Contractually stable networks

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  • Jean-François Caulier

    ()

  • Ana Mauleon

    ()

  • Vincent Vannetelbosch

    ()

Abstract

We consider situations where players are part of a network and belong to coalitions in a given coalition structure. We propose the concept of contractual stability to predict the networks that are going to emerge at equilibrium when the consent of coalition partners is needed for adding or deleting links. Two different decision rules for consent are analyzed: simple majority and unanimity. We characterize the coalition structures that make the strongly efficient network contractually stable under the unanimity decision rule and the coalition structures that sustain some critical network as contractually stable under the simple majority decision rule and under any decision rule requiring the consent of any proportion of coalition partners. Requiring the consent of coalition members may help to reconcile stability and efficiency in some classical models of network formation. Copyright Springer-Verlag Berlin Heidelberg 2013

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Bibliographic Info

Article provided by Springer in its journal International Journal of Game Theory.

Volume (Year): 42 (2013)
Issue (Month): 2 (May)
Pages: 483-499

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Handle: RePEc:spr:jogath:v:42:y:2013:i:2:p:483-499

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Related research

Keywords: Networks; Coalition structures; Contractual stability; Strong efficiency; A14; C70;

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References

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  1. Mauleon, Ana & Sempere-Monerris, Jose J. & Vannetelbosch, Vincent J., 2011. "Networks of manufacturers and retailers," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 351-367, March.
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  8. Goyal, S. & Joshi, S., 2000. "Networks of Collaboration in Oligopoly," Econometric Institute Research Papers EI 9952-/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
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  12. Ping Wang & Alison Watts, 2006. "Formation of buyer-seller trade networks in a quality-differentiated product market," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 971-1004, August.
  13. Frank H. Page, Jr., Myrna H. Wooders, 2009. "Club Networks with Multiple Memberships and Noncooperative Stability," Caepr Working Papers 2009-005, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  14. Matthew O. Jackson & Asher Wolinsky, 1994. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. Frank H. Page, Jr. & Myrna H. Wooders, 2006. "Strategic Basins of Attraction, the Path Dominance Core, and Network Formation Games," Vanderbilt University Department of Economics Working Papers 0614, Vanderbilt University Department of Economics.
  16. Dutta, Bhaskar & Mutuswami, Suresh, 1997. "Stable Networks," Journal of Economic Theory, Elsevier, vol. 76(2), pages 322-344, October.
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Cited by:
  1. repec:pdn:wpaper:73 is not listed on IDEAS
  2. Jean-François Caulier & Michel Grabisch & Agnieszka Rusinowska, 2013. "An allocation rule for dynamic random network formation processes," Documents de travail du Centre d'Economie de la Sorbonne 13063, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  3. Nils Roehl, 2013. "Two-Stage Allocation Rules," Working Papers CIE 73, University of Paderborn, CIE Center for International Economics.

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