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Contractually Stable Networks

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Author Info

  • Vincent Vannetelbosch

    (CORE, Université catholique de Louvain)

  • Jean-François Caulier

    (Universitaires Saint-Louis)

  • Ana Mauleon

    (FNRS and CEREC, CORE, Université catholique de Louvain)

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, where the network specifies the nature 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 equilibrium 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 Fondazione Eni Enrico Mattei in its series Working Papers with number 2009.47.

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Date of creation: Jun 2009
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Handle: RePEc:fem:femwpa:2009.47

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Keywords: Networks; Coalition Structures; Contractual Stability; Allocation Rules;

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References

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  1. Goyal, Sanjeev & Joshi, Sumit, 2003. "Networks of collaboration in oligopoly," Games and Economic Behavior, Elsevier, vol. 43(1), pages 57-85, April.
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  9. Jean-Jacques HERINGS & Ana MAULEON & Vincent J. VANNETELBOSCH, 2001. "Rationalizability for Social Environments," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001028, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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  11. Jackson, Matthew O. & van den Nouweland, Anne, 2002. "Strongly Stable Networks," Working Papers 1147, California Institute of Technology, Division of the Humanities and Social Sciences.
  12. MAULEON, Ana & SEMPERE-MONERRIS, Jose & VANNETELBOSCH, Vincent J., 2005. "Networks of manufacturers and retailers," CORE Discussion Papers 2005041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  15. Ping Wang & Alison Watts, 2006. "Formation of buyer-seller trade networks in a quality-differentiated product market," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 971-1004, August.
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Cited by:
  1. repec:pdn:wpaper:73 is not listed on IDEAS
  2. Jean-François Caulier & Michel Grabisch & Agnieszka Rusinowska, 2013. "An allocation rule for dynamic random network formation processes," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881125, HAL.
  3. Nils Roehl, 2013. "Two-Stage Allocation Rules," Working Papers CIE 73, University of Paderborn, CIE Center for International Economics.

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