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Stable Coalition Structures with Common Decision Scheme

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  • Guillaume Haeringer

    (Universitat Autonoma de Barcelona)

Abstract

This paper studies the stability of a finite local public goods economy, where a jurisdiction's choice of the public good is given by an exogenous decision scheme. Although it is often assumed in local public good economies with a continuum of agents, this feature is new in the finite case. A major consequence is that when entering a jurisdiction, a player will always shift the choice of the jurisdiction. Surprisingly, it turns out that a Tiebout equilibrium exists for a large class of economies only if the decision scheme solely depends on the most extremes players of a jurisdiction. Under mild assumptions, we demonstrate the existence of a Tiebout equilibrium for such a decision scheme, and the non-emptiness of the core of the associated game as well. This model can be seen as a coalition formation game where agents' decisions are driven by two opposite forces. On the one hand, they seek to enter big coalitions, but on the other hand, agents seek to join coalitions in which they are not too heterogeneous.

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1077.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1077

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  1. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc.
  2. Igal Milchtaich & Eyal Winter, 2000. "Stability and Segregation in Group Formation," Discussion Paper Series dp263, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  3. Rose-Ackerman, Susan, 1979. "Market models of local government: Exit, voting, and the land market," Journal of Urban Economics, Elsevier, vol. 6(3), pages 319-337, July.
  4. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
  5. Barbera, Salvador & Gerber, Anke, 2003. "On coalition formation: durable coalition structures," Mathematical Social Sciences, Elsevier, vol. 45(2), pages 185-203, April.
  6. Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-40, May.
  7. Westhoff, Frank, 1977. "Existence of equilibria in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 14(1), pages 84-112, February.
  8. Bogomolnaia, Anna & Jackson, Matthew O., 2002. "The Stability of Hedonic Coalition Structures," Games and Economic Behavior, Elsevier, vol. 38(2), pages 201-230, February.
  9. Salvador Barber?Author-Name: Carmen Bevi?Author-Email: Carmen.Bevia@uab.es, . "Stable Condorcet Rules," UFAE and IAE Working Papers 539.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  10. 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.
  11. Konishi, Hideo, 1996. "Voting with Ballots and Feet: Existence of Equilibrium in a Local Public Good Economy," Journal of Economic Theory, Elsevier, vol. 68(2), pages 480-509, February.
  12. Demange, Gabrielle, 1994. "Intermediate preferences and stable coalition structures," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 45-58, January.
  13. Carmen Bevi? & Salvador Barber?, . "Self-Selection Consistent Functions," UFAE and IAE Working Papers 468.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  14. Konishi, Hideo & Le Breton, Michel & Weber, Shlomo, 1998. "Equilibrium in a Finite Local Public Goods Economy," Journal of Economic Theory, Elsevier, vol. 79(2), pages 224-244, April.
  15. Dreze, J H & Greenberg, J, 1980. "Hedonic Coalitions: Optimality and Stability," Econometrica, Econometric Society, vol. 48(4), pages 987-1003, May.
  16. Suryapratim Banerjee & Hideo Konishi & Tayfun Sonmez, 1999. "Core in a Simple Coalition Formation Game," Boston College Working Papers in Economics 449, Boston College Department of Economics.
  17. Jehiel, Philippe & Scotchmer, Suzanne, 2001. "Constitutional Rules of Exclusion in Jurisdiction Formation," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 393-413, April.
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