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Stable Partitions in a Model with Group-Dependent Feasible Sets

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Author Info

  • Michel Le Breton

    (Université de Toulouse I)

  • Shlomo Weber

    (Department of Economics, Southern Methodist University)

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    Abstract

    In this paper we consider a model of group formation where group of individuals may have different feasible sets. We focus on two polar cases, increasing returns, when the set of feasible alternatives increases if a new member joins thegroup, and decreasing returns, when a new member has an opposite effect and reduces the number of alternatives available for the enlarged group. We consider two notions, stability and strong stability of group structures, that correspond to Nash and Strong Nash equilibrium of the associated non-cooperative game. We prove existence results for various classes of environments and also investigate the link between the dimensionality of the set of alternatives and the existence of stable structures.

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    File URL: http://www.econ.ku.dk/english/research/publications/wp/2003/0324.pdf/
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    Bibliographic Info

    Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 03-24.

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    Length: 28 pages
    Date of creation:
    Date of revision: May 2003
    Handle: RePEc:kud:kuiedp:0324

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    Related research

    Keywords: feasible sets; stable partitions; positive externality; increasing and decreasing returns;

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    References

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    1. Le Breton, M. & Owen, G. & Weber, S., 1991. "Strongly Balanced Cooperative Games," G.R.E.Q.A.M. 91a09, Universite Aix-Marseille III.
    2. Le Breton, M, 1989. "A Note on Balancedness and Nonemptiness of the Core in Voting Games," International Journal of Game Theory, Springer, vol. 18(1), pages 111-17.
    3. Breton, M. le & Weber, S., 1992. "Stability of Coalition Structures and the Principle of Optimal Partitioning," Papers 93-6, York (Canada) - Department of Economics.
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