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Clubs and the Market: Large Finite Economies

  • Ellickson, Bryan
  • Grodal, Birgit
  • Scotchmer, Suzanne
  • Zame, William R.

This paper defines a general equilibrium model with exchange and club formation. Agents trade multiple private goods widely in the market, can belong to several clubs, and care about the characteristics of the other members of thei r clubs. The space of agents and the number of possible club types are finite. It is shown that (i) approximate competitive equilibrium exists, (ii) the core can approximately be decentralized. The approximations are close if the economy is large. The central subtlety is in modeling club memberships and expressing the notion that membership choices are consistent across the population.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 101 (2001)
Issue (Month): 1 (November)
Pages: 40-77

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Handle: RePEc:eee:jetheo:v:101:y:2001:i:1:p:40-77
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  1. Brueckner Jan K., 1994. "Tastes, Skills, and Local Public Goods," Journal of Urban Economics, Elsevier, vol. 35(2), pages 201-220, March.
  2. Harold L. Cole & Edward C. Prescott, 1996. "Valuation equilibria with clubs," Staff Report 174, Federal Reserve Bank of Minneapolis.
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  4. Scotchmer, Suzanne, 1996. "Externality Pricing in Club Economics," Department of Economics, Working Paper Series qt4vs6f9w3, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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  11. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market: Large Finite Economies," Discussion Papers 99-05, University of Copenhagen. Department of Economics.
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  17. Diamantaras, Dimitrios & Gilles, Robert P & Scotchmer, Suzanne, 1996. "Decentralization of Pareto Optima in Economies with Public Projects, Nonessential Private Goods and Convex Costs," Economic Theory, Springer, vol. 8(3), pages 555-64, October.
  18. Berglas, Eitan & Pines, David, 1980. "Clubs as a case of competitive industry with goods of variable quality," Economics Letters, Elsevier, vol. 5(4), pages 363-366.
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    • Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
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  25. Wooders, Myrna Holtz, 1989. "A Tiebout theorem," Mathematical Social Sciences, Elsevier, vol. 18(1), pages 33-55, August.
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  27. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
  28. Grodal, Birgit & Trockel, Walter & Weber, Shlomo, 1984. "On approximate cores of non-convex economies," Economics Letters, Elsevier, vol. 15(3-4), pages 197-202.
  29. Berglas, Eitan, 1976. "Distribution of tastes and skills and the provision of local public goods," Journal of Public Economics, Elsevier, vol. 6(4), pages 409-423, November.
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