Cores of games with positive externalities
AbstractThis paper introduces a core concept, called the γ-core, in the primitive framework of a strategic game. For a certain class of strategic games, it is a weaker concept than the strong Nash equilibrium, but in general stronger than the conventional α- and β- cores. We argue that the coalition formation process is an infinitely repeated game and show that the grand coalition forms if the γ-core is nonempty. This is a weaker sufficient condition than the previous such condition (Maskin (2003, Theorem 4)). As an application of this result, it is shown that the γ- core of an oligopolistic market is nonempty and thus the grand coalition forms.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010004.
Date of creation: 01 Jan 2010
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positive externalities; strategic game; core; repeated game; coalition formation;
Find related papers by JEL classification:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D62 - Microeconomics - - Welfare Economics - - - Externalities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-11 (All new papers)
- NEP-CDM-2010-06-11 (Collective Decision-Making)
- NEP-GTH-2010-06-11 (Game Theory)
- NEP-NET-2010-06-11 (Network Economics)
- NEP-SEA-2010-06-11 (South East Asia)
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- Pham Do, Kim Hang & Dinar, Ariel & McKinney, Daene, 2011. "Can issue linkage help mitigate externalities and enhance cooperation," MPRA Paper 37408, University Library of Munich, Germany.
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