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Marginal contributions and externalities in the value

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  • Geoffroy de Clippel

    ()
    (Brown University)

  • Roberto Serrano

    ()
    (Brown University and IMDEA Social Sciences)

Abstract

Our concern is the extension of the theory of the Shapley value to games with externalities. Using the standard axiom systems behind the Shapley value for an arbitrary exogenous coalition structure leads to the identification of bounds on players’ payoffs around an \"externality-free\" value. In endogenizing the coalition structure, we analyze a two-stage process of coalition formation in whose second stage our axiomatic results are applied. We find reasons to explain inefficient coalition structures, and provide sufficient conditions for efficiency.

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Bibliographic Info

Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2007-04.

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Date of creation: 28 Feb 2007
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Publication status: Published in Econometrica 76(6), November 2008: 1413-1436
Handle: RePEc:imd:wpaper:wp2007-04

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Keywords: externalities; marginal contributions; Shapley value; Pigouvian transfers; coalition formation;

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  1. Khmelnitskaya, Anna B., 1999. "Marginalist and efficient values for TU games," Mathematical Social Sciences, Elsevier, vol. 38(1), pages 45-54, July.
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  14. Macho-Stadler, Ines & Perez-Castrillo, David & Wettstein, David, 2006. "Efficient bidding with externalities," Games and Economic Behavior, Elsevier, vol. 57(2), pages 304-320, November.
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  19. repec:fth:tilbur:99121 is not listed on IDEAS
  20. Montero, M.P., 1999. "Coalition Formation in Games with Externalities," Discussion Paper 1999-121, Tilburg University, Center for Economic Research.
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