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Coalition Formation with Local Public Goods and Network Effect

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  • Fan-chin Kung

    (City University of Hong Kong & Academia Sinica)

Abstract

Many 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.

Suggested Citation

  • Fan-chin Kung, 2005. "Coalition Formation with Local Public Goods and Network Effect," Game Theory and Information 0506007, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpga:0506007
    Note: Type of Document - pdf; pages: 17
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    References listed on IDEAS

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    More about this item

    Keywords

    Coalition formation; core; network effect; local public goods;
    All these keywords.

    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

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