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clubs and the Market: Large Finite Economies

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  • Ellickson, Bryan
  • Grodal, Birgit
  • Scotchmer, Suzanne
  • Zane, William R.

Abstract

This paper defines a general equilibrium model with exchange and club formation. Agents trade multiple private goods widely in the market, can belong to several clubs, and care about the characteristics of the other members of thei r clubs. The space of agents and the number of possible club types are finite. It is shown that (i) approximate competitive equilibrium exists, (ii) the core can approximately be decentralized. The approximations are close if the economy is large. The central subtlety is in modeling club memberships and expressing the notion that membership choices are consistent across the population.
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Suggested Citation

  • Ellickson, Bryan & Grodal, Birgit & Scotchmer, Suzanne & Zane, William R., 1997. "clubs and the Market: Large Finite Economies," Department of Economics, Working Paper Series qt10k1b44j, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt10k1b44j
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    References listed on IDEAS

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    More about this item

    Keywords

    approximate equilibrium; clubs; approximate decentralization; Social and Behavioral Sciences;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • H4 - Public Economics - - Publicly Provided Goods

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