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Coalition Formation in Games without Synergies

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Author Info

  • Marco Marini

    (Istituto di Scienze Economiche, Università degli Studi di Urbino)

  • Sergio Currarini

    (Dipartimento di Scienze Economiche, Università Ca’ Foscari di Venezia)

Abstract

This paper establishes sufficient conditions for the existence of a stable coalition structure in the ”coalition unanimity” game of coalition formation, first defined by Hart and Kurz (1983) and more recently studied by Yi (1997, 2000). Our conditions are defined on the strategic form game used to derive the payoffs the game of coalition formation. We show that if no synergies are generated by the formation of coalitions, a stable coalition structure always exists provided that players are symmetric and either the game exhibits strategic complementarity or, if strategies are substitutes, the best reply functions are contractions. We illustrate the role of synergies in a Cournot oligopoly example with cost reducing R&D.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.43.

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Date of creation: Mar 2004
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Handle: RePEc:fem:femwpa:2004.43

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Keywords: Coalition formation; Synergies; Strong Nash equilibrium;

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References

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  1. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
  2. Currarini, Sergio & Marini, Marco, 2002. "A conjectural cooperative equilibrium for strategic form games," MPRA Paper 33384, University Library of Munich, Germany.
  3. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
  4. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
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Cited by:
  1. Sergio Currarini & Marco A. Marini, 2013. "Coalitional Approaches to Collusive Agreements in Oligopoly Games," DIAG Technical Reports 2013-15, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  2. Sergio Currarini & Marco A. Marini, 2013. "Majority Rule and Coalitional Stability," Economics Bulletin, AccessEcon, vol. 33(3), pages 1660-1668.
  3. Marco Marini, 2007. "An Overview of Coalition & Network Formation Models for Economic Applications," Working Papers 0712, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2007.
  4. Marco A. Marini, 2007. "An Overview of Coalitions and Networks Formation Models for Economic Applications," Working Papers 0707, CREI Università degli Studi Roma Tre, revised 2007.
  5. Sergio Currarini & Marco Marini, 2012. "Majority Rules and Coalition Stability," DIAG Technical Reports 2012-01, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  6. Marco Marini & Giorgio Rodano, 2011. "Lead, Follow or Cooperate? Endogenous Timing & Cooperation in Symmetric Duopoly Games," Working Papers 1112, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
  7. Marco Marini & Giorgio Rodano, 2012. "Sequential vs Collusive Payoffs in Symmetric Duopoly Games," DIAG Technical Reports 2012-06, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".

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