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Partnerships

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  • Joseph Farrell and Suzanne Scotchmer.

Abstract

A partnership is a coalition that divides its output equally. The authors show that when partnerships can form freely, a stable or "core" pa rtition into partnerships always exists and is generically unique. Wh en people differ in ability, the equal-sharing constraint inefficient ly limits the size of partnerships. The authors give conditions under which partnerships containing more able people will be larger, and s how that if the population is replicated, partnerships may become mor e or less homogeneous, depending on an elasticity condition. They als o examine when the equal-sharing inefficiency vanishes in the limit. Copyright 1988, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Paper provided by University of California at Berkeley in its series Economics Working Papers with number 8616.

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Date of creation: 01 Nov 1986
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Handle: RePEc:ucb:calbwp:8616

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