Cartel Stability under an Optimal Sharing Rule
AbstractPrevious work on the formation and stability of cartels has focused on the case of identical players. This assumption is very restrictive in many economic environments. This paper analyses stability of cartels in games with heterogeneous players and spillovers to non-members. I introduce a sharing rule for coalition payoffs, called "optimal sharing" which stabilises all cartels that are possibly stable under any rule. Under optimal sharing the grand coalition is the unique stable cartel if spillovers are negative. I introduce a new property, called "non-essentiality" and determine the set of stable cartels under optimal sharing if spillovers are positive and if the non-essentiality property applies. Finally I analyse cartel stability under optimal sharing in simple public goods game with heterogeneous players. My results show – in contrast to earlier findings for identical players – that large coalitions may well be stable.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2005.77.
Date of creation: May 2005
Date of revision:
Cartel stability; Coalition formation games with spillovers; Partition function approach; Optimal sharing rule;
Other versions of this item:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-06-27 (All new papers)
- NEP-COM-2005-06-27 (Industrial Competition)
- NEP-PBE-2005-06-27 (Public Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Dellink, Rob & Finus, Michael, 2012.
"Uncertainty and climate treaties: Does ignorance pay?,"
Resource and Energy Economics,
Elsevier, vol. 34(4), pages 565-584.
- Dellink, Rob & Finus, Michael, 2009. "Uncertainty and Climate Treaties: Does Ignorance Pay?," Stirling Economics Discussion Papers 2009-15, University of Stirling, Division of Economics.
- Emilio Calvo & Santiago J. Rubio, 2012. "Dynamic Models of International Environmental Agreements: A Differential Game Approach," Discussion Papers in Economic Behaviour 0112, University of Valencia, ERI-CES.
- Michael Finus & Pedro Pintassilgo, 2010.
"International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help?,"
2010.79, Fondazione Eni Enrico Mattei.
- Michael Finus & Pedro Pintassilgo, 2012. "International environmental agreements under uncertainty: does the 'veil of uncertainty' help?," Oxford Economic Papers, Oxford University Press, vol. 64(4), pages 736-764, October.
- Finus, Michael & Pintassilgo, Pedro, 2010. "International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help?," Spatial and Organizational Dynamics Discussion Papers 2010-7, CIEO-Research Centre for Spatial and Organizational Dynamics, University of Algarve.
- Michael Finus & Pedro Pintassilgo, 2010. "International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help?," Discussion Papers 1003, Exeter University, Department of Economics.
- Berglöf, Erik & Burkart, Mike & Friebel, Guido & Paltseva, Elena, 2012.
"Club-in-the-club: Reform under unanimity,"
Journal of Comparative Economics,
Elsevier, vol. 40(3), pages 492-507.
- Erik Ansink & Michael Gengenbach & Hans-Peter Weikard, 2012. "River Sharing and Water Trade," Working Papers 2012.17, Fondazione Eni Enrico Mattei.
- Rögnvaldur Hannesson, 2010. "The coalition of the willing: Effect of country diversity in an environmental treaty game," The Review of International Organizations, Springer, vol. 5(4), pages 461-474, December.
- Pedro Pintassilgo & Michael Finus & Marko Lindroos & Gordon Munro, 2010.
"Stability and Success of Regional Fisheries Management Organizations,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 46(3), pages 377-402, July.
- Finus, Michael & Lindroos, Marko & Munro, Gordon & Pintassilgo, Pedro, 2008. "Stability and Success of Regional Fisheries Management Organizations," Stirling Economics Discussion Papers 2008-11, University of Stirling, Division of Economics.
- Michael Finus & Pedro Pintassilgo & Marko Lindroos & Gordon Munro, 2008. "Stability and Success of Regional Fisheries Management Organizations," Working Papers 2008.20, Fondazione Eni Enrico Mattei.
- Eyckmans, Johan & Finus, Michael & Mallozzi, Lina, 2011.
"A New Class of Welfare Maximizing Stable Sharing Rules for Partition Function Games with Externalities,"
2011/08, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
- Eyckmans, Johan & Finus, Michael & Mallozzy, Lina, 2010. "A New Class of Welfare Maximizing Stable Sharing Rules for Partition Function Games with Externalities," Department of Economics Working Papers 32513, University of Bath, Department of Economics.
- Eyckmans, Johan & Finus, Michael & Mallozzi, Lina, 2011. "A New Class of Welfare Maximizing Stable Sharing Rules for Partition Function Games with Externalities," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/409419, Katholieke Universiteit Leuven.
- Miyuki Nagashima & Rob Dellink, 2008.
"Technology spillovers and stability of international climate coalitions,"
International Environmental Agreements: Politics, Law and Economics,
Springer, vol. 8(4), pages 343-365, December.
- Miyuki Nagashima & Rob Dellink, 2007. "Technology Spillovers and Stability of International Climate Coalitions," Working Papers 2007.98, Fondazione Eni Enrico Mattei.
- Kronbak, Lone Gronbaek & Lindroos, Marko, 2007. "Sharing Rules and Stability in Coalition Games with Externalities," Marine Resource Economics, Marine Resources Foundation, vol. 22(2).
- Thijs Dekker & Rob Dellink & Janina Ketterer, 2013. "The Fatter the Tail, the Fatter the Climate Agreement - Simulating the Influence of Fat Tails in Climate Change Damages on the Success of International Climate Negotiations," CESifo Working Paper Series 4059, CESifo Group Munich.
- Porchiung Chou & Cheickna Sylla, 2008. "The formation of an international environmental agreement as a two-stage exclusive cartel formation game with transferable utilities," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 317-341, December.
- Jonathan Colmer, 2011. "Asymmetry, optimal transfers and international environmental agreements," Grantham Research Institute on Climate Change and the Environment Working Papers 66, Grantham Research Institute on Climate Change and the Environment.
- Harold Houba & Gerard van der Laan, 2013. "International Environmental Agreements for River Sharing Problems," Tinbergen Institute Discussion Papers 13-157/II, Tinbergen Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (barbara racah).
If references are entirely missing, you can add them using this form.