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Contractually stable networks

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  • Jean-François, CAULIER
  • Ana, MAULEON
  • Vincent, VANNETELBOSCH

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

Abstract

We develop a theoretical framework that allows us to study which bilateral links and coalition structures are going to emerge at equilibrium. We define the notion of coalitional network to represent a network and a coalition structure, whre the network specifies the natyure of the relationship each individual has with his coalition members and with individuals outside his coalition. To predict the coalitional networks that are going to emerge at equiibrium we propose the concept of contractual stability which requires that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. We show that there always exists a contractually stable coalitional network under the simple majority decision rule and the component-wise egalitarian or majoritarian allocation rules. Moreover, requiring the consent of group members may help to reconcile stability and efficiency

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Bibliographic Info

Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2008045.

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Length: 28
Date of creation: 01 Nov 2008
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Handle: RePEc:ctl:louvec:2008045

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Keywords: Networks; coaliation structures; contractual stability; allocation rules;

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  1. Page Jr, Frank H & Wooders, Myrna H & Kamat, Samir, 2001. "Networks And Farsighted Stability," The Warwick Economics Research Paper Series (TWERPS) 621, University of Warwick, Department of Economics.
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  12. Dreze, J H & Greenberg, J, 1980. "Hedonic Coalitions: Optimality and Stability," Econometrica, Econometric Society, vol. 48(4), pages 987-1003, May.
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  18. Sumit Joshi, 2000. "Networks of Collaboration in Oligopoly," Econometric Society World Congress 2000 Contributed Papers 0623, Econometric Society.
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Cited by:
  1. repec:pdn:wpaper:73 is not listed on IDEAS
  2. Nils Roehl, 2013. "Two-Stage Allocation Rules," Working Papers CIE 73, University of Paderborn, CIE Center for International Economics.
  3. Jean-François Caulier & Michel Grabisch & Agnieszka Rusinowska, 2013. "An allocation rule for dynamic random network formation processes," Documents de travail du Centre d'Economie de la Sorbonne 13063, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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