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Contractually Stable Alliances

Author

Listed:
  • Christophe Bravard
  • Sudipta Sarangi
  • ANA MAULEON
  • JOSE J. SEMPERE-MONERRIS
  • VINCENT VANNETELBOSCH

Abstract

We analyze how different rules for exiting an alliance (simple majority, unanimity or unanimity with side payments) will affect the formation of strategic alliances. We find that no alliance structure is contractually stable under the simple majority rule. Once unanimous consent is required, asymmetric alliance structures consisting of two alliances are contractually stable. In addition, the grand alliance which is the efficient structure is stable. Allowing for side payments to compensate former partners improves efficiency. Finally, we show that different rules of exit may coexist in different alliances in the long run.
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Suggested Citation

  • Christophe Bravard & Sudipta Sarangi & ANA MAULEON & JOSE J. SEMPERE-MONERRIS & VINCENT VANNETELBOSCH, 2016. "Contractually Stable Alliances," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(2), pages 212-225, April.
    • Handle: RePEc:bla:jpbect:v:18:y:2016:i:2:p:212-225
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    File URL: http://hdl.handle.net/10.1111/jpet.2016.18.issue-2
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    Cited by:

    1. Jérôme Dollinger & Ana Mauleon & Vincent Vannetelbosch, 2024. "R &d and market sharing agreements," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 78(3), pages 877-922, November.
    2. Ping Sun & Elena Parilina, 2024. "Stable and efficient networks with neighborhood‐influenced externalities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(3), June.
    3. Mauleon, Ana & Sempere-Monerris, Jose J. & Vannetelbosch, Vincent, 2023. "R&D network formation with myopic and farsighted firms," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 203-229.
    4. Ana Mauleon & Jose J. Sempere-Monerris & Vincent Vannetelbosch, 2023. "Limited Farsightedness in R &D Network Formation," Dynamic Games and Applications, Springer, vol. 13(2), pages 549-565, June.
    5. Mauleon, Ana & Roehl, Nils & Vannetelbosch, Vincent, 2018. "Constitutions and groups," Games and Economic Behavior, Elsevier, vol. 107(C), pages 135-152.

    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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