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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

We study large finite club economies in which agents can belong to several clubs, and care about the characteristics of the other club members. Club memberships must be integer consistent in aggregate. We show that states in the approximate core can approximately be decentralized by prices for private goods and for club memberships, that the approximate core is nonempty, and that approximate club equilibria exist. Our arguments use the convexification tools used for private goods economies, but we also develop a new tool to address the consistency requirement on memberships that are special to club economies. This tool allows us to overcome the integer consistency problems that are avoided in our (1999) paper by assuming a continuum of agents.

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Paper provided by Department of Economics, Institute for Business and Economic Research, UC Berkeley in its series Department of Economics, Working Paper Series with number qt10k1b44j.

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Date of creation: 01 Apr 1997
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Handle: RePEc:cdl:econwp:qt10k1b44j

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Keywords: approximate equilibrium; clubs; approximate decentralization; Social and Behavioral Sciences;

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  1. Conley, John P. & Wooders, Myrna H., 1997. "Equivalence of the Core and Competitive Equilibrium in a Tiebout Economy with Crowding Types," Journal of Urban Economics, Elsevier, vol. 41(3), pages 421-440, May.
  2. Harold L Cole & Edward C Prescott, 1997. "Valuation equilibrium with Clubs," Levine's Working Paper Archive 912, David K. Levine.
  3. Diamantaras, Dimitrios & Gilles, Robert P & Scotchmer, Suzanne, 1996. "Decentralization of Pareto Optima in Economies with Public Projects, Nonessential Private Goods and Convex Costs," Economic Theory, Springer, vol. 8(3), pages 555-64, October.
  4. Engl, Greg & Scotchmer, Suzanne, 1996. "The core and the hedonic core: Equivalence and comparative statics," Journal of Mathematical Economics, Elsevier, vol. 26(2), pages 209-248.
  5. Mas-Colell, Andreu, 1980. "Efficiency and Decentralization in the Pure Theory of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 625-41, June.
  6. Scotchmer, Suzanne, 1996. "Externality Pricing in Club Economics," Department of Economics, Working Paper Series qt4vs6f9w3, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  7. Boadway, Robin, 1982. "On the Method of Taxation and the Provision of Local Public Goods: Comment," American Economic Review, American Economic Association, vol. 72(4), pages 846-51, September.
  8. Hildenbrand, Werner & Schmeidler, David & Zamir, Shmuel, 1973. "Existence of Approximate Equilibria and Cores," Econometrica, Econometric Society, vol. 41(6), pages 1159-66, November.
  9. Scotchmer, Suzanne & Wooders, Myrna Holtz, 1987. "Competitive equilibrium and the core in club economies with anonymous crowding," Journal of Public Economics, Elsevier, vol. 34(2), pages 159-173, November.
  10. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
  11. Ellickson, Bryan & Grodal, Birgit & Scotchmer, Suzanne & Zame, William R., 1997. "Clubs and the Market: Continuum Economies," Department of Economics, Working Paper Series qt7n5699xj, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  12. Wooders, Myrna Holtz, 1989. "A Tiebout theorem," Mathematical Social Sciences, Elsevier, vol. 18(1), pages 33-55, August.
  13. Dimitrios Diamantaras & Robert P. Gilles, 1994. "The Pure Theory of Public Goods: Efficiency, Decentralization, and the Core," Public Economics 9403001, EconWPA.
  14. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
  15. Ellickson, Bryan, 1973. "A Generalization of the Pure Theory of Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 417-32, June.
  16. Robert P. Gilles and Suzanne Scotchmer., 1995. "Decentralization in Replicated Club Economies with Multiple Private Goods," Economics Working Papers 95-243, University of California at Berkeley.
  17. Greenberg, Joseph & Shitovitz, Benyamin, 1988. "Consistent voting rules for competitive local public goods economies," Journal of Economic Theory, Elsevier, vol. 46(2), pages 223-236, December.
  18. Kannai, Yakar, 1970. "Continuity Properties of the Core of a Market," Econometrica, Econometric Society, vol. 38(6), pages 791-815, November.
  19. Anderson, Robert M, 1978. "An Elementary Core Equivalence Theorem," Econometrica, Econometric Society, vol. 46(6), pages 1483-87, November.
  20. Grodal, Birgit, 1976. "Existence of Approximate Cores with Incomplete Preferences," Econometrica, Econometric Society, vol. 44(4), pages 829-30, July.
  21. Bryan Ellickson and Birgit Grodal, Suzanne Scotchmer, and William R.Zame., 1997. "Clubs and the Market: Large Finite Economies," Economics Working Papers 97-255, University of California at Berkeley.
  22. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  23. Berglas, Eitan, 1976. "Distribution of tastes and skills and the provision of local public goods," Journal of Public Economics, Elsevier, vol. 6(4), pages 409-423, November.
  24. Brueckner, J.K., 1990. "Tastes, Skills, And Local Public Goods," Working Papers 8, John Deutsch Institute for the Study of Economic Policy.
  25. Berglas, Eitan & Pines, David, 1981. "Clubs, local public goods and transportation models : A synthesis," Journal of Public Economics, Elsevier, vol. 15(2), pages 141-162, April.
  26. Grodal, Birgit & Trockel, Walter & Weber, Shlomo, 1984. "On approximate cores of non-convex economies," Economics Letters, Elsevier, vol. 15(3-4), pages 197-202.
  27. Anderson, Robert M, 1985. "Strong Core Theorems with Nonconvex Preferences," Econometrica, Econometric Society, vol. 53(6), pages 1283-94, November.
  28. Suzanne Scotchmer, 1985. "Two-Tier Pricing of Shared Facilities in a Free-Entry Equilibrium," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 456-472, Winter.
  29. Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-40, May.
  30. Scotchmer, Suzanne, 1985. "Profit-maximizing clubs," Journal of Public Economics, Elsevier, vol. 27(1), pages 25-45, June.
  31. Greg Engl & Suzanne Scotchmer, 1997. "The law of supply in games, markets and matching models (*)," Economic Theory, Springer, vol. 9(3), pages 539-550.
  32. Berglas, Eitan & Pines, David, 1980. "Clubs as a case of competitive industry with goods of variable quality," Economics Letters, Elsevier, vol. 5(4), pages 363-366.
  33. Pines, David, 1991. "Tiebout without politics," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 469-489, November.
  34. Ellickson, Bryan, 1979. "Competitive equilibrium with local public goods," Journal of Economic Theory, Elsevier, vol. 21(1), pages 46-61, August.
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