A Competitive Partnership Formation Process
AbstractA group of heterogeneous 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 Lund University, Department of Economics in its series Working Papers with number 2013:2.
Length: 18 pages
Date of creation: 04 Feb 2013
Date of revision:
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Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
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Partnership formation; adjustment process; equilibrium; assignment market;
Other versions of this item:
- Tommy Andersson & Jens Gudmundsson & Dolf Talman & Zaifu Yang, 2013. "A Competitive Partnership Formation Process," Discussion Papers 13/04, Department of Economics, University of York.
- Andersson, T. & Gudmundsson, J. & Talman, A.J.J. & Yang, Z., 2013. "A Competitive Partnership Formation Process," Discussion Paper 2013-008, Tilburg University, Center for Economic Research.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-02 (All new papers)
- NEP-CDM-2013-03-02 (Collective Decision-Making)
- NEP-GTH-2013-03-02 (Game Theory)
- NEP-MIC-2013-03-02 (Microeconomics)
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