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Competitive outcomes and endogenous coalition formation in an n-person game

  • Sun, Ning
  • Trockel, Walter
  • Yang, Zaifu

We extend the analysis of competitive outcomes in TU market games of Shapley and Shubik [Shapley, L.S., Shubik, M., 1975. Competitive outcomes in the cores of market games. International Journal of Game Theory 4, 229-237] in two ways. First, our representing economies are coalition production economies. Second, and more importantly, our analysis holds for arbitrary TU games. By adopting the C-stable set of Guesnerie and Oddou [Guesnerie, R., Oddou, C., 1979. On economic games which are not necessarily superadditive. Economics Letters 3, 301-306], renamed c-core in our paper, we are able to characterize competitive outcomes even in games with empty core. As competitive outcomes are associated with specific coalition structures, our main result provides an endogenous determination of coalition building and shows that the c-core of any TU game coincides with the set of competitive outcomes of the corresponding coalition production economy.

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Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 44 (2008)
Issue (Month): 7-8 (July)
Pages: 853-860

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Handle: RePEc:eee:mateco:v:44:y:2008:i:7-8:p:853-860
Contact details of provider: Web page: http://www.elsevier.com/locate/jmateco

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  1. McKenzie, Lionel W, 1981. "The Classical Theorem on Existence of Competitive Equilibrium," Econometrica, Econometric Society, vol. 49(4), pages 819-41, June.
  2. Shapley, Lloyd S. & Shubik, Martin, 1969. "On market games," Journal of Economic Theory, Elsevier, vol. 1(1), pages 9-25, June.
  3. Gabrielle Demange, 2005. "Group formation: The interaction of increasing returns and preferences' diversity," Post-Print halshs-00573563, HAL.
  4. Billera, Louis J., 1974. "On games without side payments arising from a general class of markets," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 129-139, August.
  5. Zhou Lin, 1994. "A New Bargaining Set of an N-Person Game and Endogenous Coalition Formation," Games and Economic Behavior, Elsevier, vol. 6(3), pages 512-526, May.
  6. Neuefeind, Wilhelm, 1974. "A stochastic bargaining process for n-person games," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 175-191, August.
  7. Trockel, Walter, 1996. "A Walrasian approach to bargaining games," Economics Letters, Elsevier, vol. 51(3), pages 295-301, June.
  8. Guesnerie Roger & Oddou Claude, 1979. "Second best taxation as a game," CEPREMAP Working Papers (Couverture Orange) 7919, CEPREMAP.
  9. Qin, Cheng-Zhong, 1993. "A Conjecture of Shapley and Shubik on Competitive Outcomes in the Cores of NTU Market Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 22(4), pages 335-44.
  10. Mas-Colell, Andreu, 1989. "An equivalence theorem for a bargaining set," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 129-139, April.
  11. Sondermann, Dieter, 1974. "Economies of scale and equilibria in coalition production economies," Journal of Economic Theory, Elsevier, vol. 8(3), pages 259-291, July.
  12. Anderson, Robert M, 1978. "An Elementary Core Equivalence Theorem," Econometrica, Econometric Society, vol. 46(6), pages 1483-87, November.
  13. Edgeworth, Francis Ysidro, 1881. "Mathematical Psychics," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number edgeworth1881.
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