AbstractThis paper analyzes the endogenous formation of a partnership as the trade-off between efficiency gains and a 'cost' associated with the partial loss of control over the decisions the partnership takes. For instance, by forming a monetary union, countries benefit from a more coordinated monetary policy. However, due to the partial loss of control over the union decision, the policy implemented might differ from the policy a member would have taken on their own. We interpret this possible difference as a cost. We notably show that individuals with ''similar" characteristics form a partnership, and the more diverse the characteristics, the smaller the partnership size.
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Bibliographic InfoPaper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2006-05.
Length: 36 pages
Date of creation: 2006
Date of revision:
partnerships; coalitions; alliances; endogenous formation; efficiency gains; loss of control; diverse characteristics; opinions;
Find related papers by JEL classification:
- D7 - Microeconomics - - Analysis of Collective Decision-Making
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-22 (All new papers)
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