Coalition Formation with Local Public Goods and Network Effect
AbstractMany local public goods are provided by coalitions and some of them have network effects. Namely, people prefer to consume a public good in a coalition with more members. This paper adopts the Drèze and Greenberg (1980) type utility function where players have preferences over goods as well as coalition members. In a game with anonymous and separable network effect, the core is nonempty when coalition feasible sets are monotonic and players' preferences over public goods have connected support. All core allocations consist of connected coalitions and they are Tiebout equilibria as well. We also examine the no-exodus equilibrium for games whose feasible sets are not monotonic.
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Length: 17 pages
Date of creation: 28 Jun 2005
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Coalition formation; core; network effect; local public goods;
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-07-03 (All new papers)
- NEP-NET-2005-07-03 (Network Economics)
- NEP-PBE-2005-07-03 (Public Economics)
- NEP-URE-2005-07-03 (Urban & Real Estate Economics)
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