A Competitive Partnership Formation Process
AbstractA group of heterogenous agents may form partnerships in pairs. All single agents as well as all partnerships generate values. If two agents choose to cooperate, they need to specify how to split their joint value among one another. In equilibrium, which may or may not exist, no agents have incentives to break up or form new partnerships. This paper proposes a dynamic competitive adjustment process that always either finds an equilibrium or exclusively disproves the existence of any equilibrium in finitely many steps. When an equilibrium exists, partnership and revenue distribution will be automatically and endogenously determined by the process. Moreover, several fundamental properties of the equilibrium solution and the model are derived.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2013-008.
Date of creation: 2013
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Partnership formation; adjustment process; equilibrium; assignment market;
Other versions of this item:
- Andersson , Tommy & Gudmundsson , Jens & Talman , Adolphus & Yang , Zaifu, 2013. "A Competitive Partnership Formation Process," Working Papers 2013:2, Lund University, Department of Economics.
- Tommy Andersson & Jens Gudmundsson & Dolf Talman & Zaifu Yang, 2013. "A Competitive Partnership Formation Process," Discussion Papers 13/04, Department of Economics, University of York.
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
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