AbstractA partnership is a coalition that divides its output equally. The authors show that when partnerships can form freely, a stable or "core" pa rtition into partnerships always exists and is generically unique. Wh en people differ in ability, the equal-sharing constraint inefficient ly limits the size of partnerships. The authors give conditions under which partnerships containing more able people will be larger, and s how that if the population is replicated, partnerships may become mor e or less homogeneous, depending on an elasticity condition. They als o examine when the equal-sharing inefficiency vanishes in the limit. Copyright 1988, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Bibliographic InfoArticle provided by MIT Press in its journal Quarterly Journal of Economics.
Volume (Year): 103 (1988)
Issue (Month): 2 (May)
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Other versions of this item:
- Joseph Farrell and Suzanne Scotchmer., 1986. "Partnerships," Economics Working Papers 8616, University of California at Berkeley.
- Farrell, Joseph & Scotchmer, Suzanne, 1986. "Partnerships," Department of Economics, Working Paper Series qt49d211x4, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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