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Partnerships

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Author Info
Ludovic Renou () (School of Economics, University of Adelaide)

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Abstract

This 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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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/econwp06-05.pdf
File Format: application/pdf
File Function: First version, April 2006
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Publisher Info
Paper provided by University of Adelaide, School of Economics in its series Working Papers with number 2006-05.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 36 pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:adl:wpaper:2006-05

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Postal: Adelaide SA 5005
Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/
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Related research
Keywords: 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:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Garance Genicot & Debraj Ray, 2003. "Group Formation in Risk--Sharing Arrangements," Review of Economic Studies, Blackwell Publishing, vol. 70(1), pages 87-113, January.
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  3. Battigalli, Pierpaolo & Bonanno, Giacomo, 1999. "Recent results on belief, knowledge and the epistemic foundations of game theory," Research in Economics, Elsevier, vol. 53(2), pages 149-225, June. [Downloadable!] (restricted)
    Other versions:
  4. Diamond, Douglas W, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Blackwell Publishing, vol. 51(3), pages 393-414, July. [Downloadable!] (restricted)
  5. Todd Sandler & Keith Hartley, 2001. "Economics of Alliances: The Lessons for Collective Action," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 869-896, September. [Downloadable!] (restricted)
  6. Harris, Milton & Raviv, Artur, 1993. "Differences of Opinion Make a Horse Race," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 6(3), pages 473-506. [Downloadable!] (restricted)
  7. Holmstrom, Bengt & Myerson, Roger B, 1983. "Efficient and Durable Decision Rules with Incomplete Information," Econometrica, Econometric Society, vol. 51(6), pages 1799-819, November. [Downloadable!] (restricted)
    Other versions:
  8. Giovanni Maggi & Massimo Morelli, 2006. "Self-Enforcing Voting in International Organizations," American Economic Review, American Economic Association, vol. 96(4), pages 1137-1158, September. [Downloadable!]
  9. Ludovic RENOU, 2003. "Beliefs about Beliefs and Endogenous Formation of a Multi-lender Coalition in a Costly State Verification Model," Economics Working Papers ECO2003/21, European University Institute. [Downloadable!]
  10. Jullien, Bruno, 2000. "Participation Constraints in Adverse Selection Models," Journal of Economic Theory, Elsevier, vol. 93(1), pages 1-47, July. [Downloadable!] (restricted)
    Other versions:
  11. Kamien, Morton I & Zang, Israel, 1993. "Competing Research Joint Ventures," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 2(1), pages 23-40, Spring.
  12. Claude, et al d'Aspremont, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February. [Downloadable!] (restricted)
  13. Farrell, Joseph & Scotchmer, Suzanne, 1988. "Partnerships," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 279-97, May. [Downloadable!] (restricted)
    Other versions:
  14. Kandel, Eugene & Pearson, Neil D, 1995. "Differential Interpretation of Public Signals and Trade in Speculative Markets," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 831-72, August. [Downloadable!] (restricted)
  15. Kohler, Marion, 2002. "Coalition formation in international monetary policy games," Journal of International Economics, Elsevier, vol. 56(2), pages 371-385, March. [Downloadable!] (restricted)
    Other versions:
  16. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-80, January. [Downloadable!] (restricted)
    Other versions:
  17. Volker Nocke, 1999. "Cartel Stability under Capacity Constraints: The Traditional View Restored," STICERD - Economics of Industry Papers 23, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  18. Konishi, Hideo & Ray, Debraj, 2003. "Coalition formation as a dynamic process," Journal of Economic Theory, Elsevier, vol. 110(1), pages 1-41, May. [Downloadable!] (restricted)
    Other versions:
  19. Kfir Eliaz & Debraj Ray, 2004. "Choice Shifts in Groups," Econometric Society 2004 North American Summer Meetings 205, Econometric Society. [Downloadable!]
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