Efficient Mixed Clubs: Nonlinear-Pricing Equilibria with Entrepreneurial Managers
AbstractScotchmer and Wooders (1987) show that efficient clubs are homogeneous when consumers are divisible in Berglas's (1976) anonymous crowding model. However, if consumers are not divisible or if clubs have multiple facilities with economies of scope, mixed clubs are efficient. In such a model, we consider clubs with multiple membership policies for different types of consumers, and show the existence and efficiency of equilibrium with nonlinear policies. We employ entrepreneurial equilibrium, an equilibrium concept with profit-seeking entrepreneurs. In our model, club managers and members of clubs care only about the members' actions, not their types. The equilibrium is efficient in our adverse selection model due to this "anonymity" of crowding effects. Our theorem can be regarded as showing the existence of a core allocation that satisfies envy-free property in the absence of nonanonymous crowding effects.
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 710.
Length: 40 pages
Date of creation: 14 Jul 2009
Date of revision: 08 Sep 2009
Publication status: published, Japanese Economic Review, 61, 35-63, 2010, the 2009 JEA Nakahara Prize Lecture.
Note: Previously circulated as "Market for Clubs with Congestible Facilities: Nonlinear-Pricing Equilibria with Entrepreneurial Managers"
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Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA
Web page: http://fmwww.bc.edu/EC/
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club goods; mixed club; efficiency; equilibrium; entrepreneurship; nonlinear contract; envy-free; core;
Other versions of this item:
- Hideo Konishi, 2010. "Efficient Mixed Clubs: Nonlinear-Pricing Equilibria With Entrepreneurial Managers," The Japanese Economic Review, Japanese Economic Association, vol. 61(1), pages 35-63.
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
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