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  • Ludovic Renou

    (School of Economics, University of Adelaide)


This paper analyzes the endogenous formation of a partnership as the trade-off between efficiency gains and a 'cost' associated with the partial loss of control over the decisions the partnership takes. For instance, by forming a monetary union, countries benefit from a more coordinated monetary policy. However, due to the partial loss of control over the union decision, the policy implemented might differ from the policy a member would have taken on their own. We interpret this possible difference as a cost. We notably show that individuals with ''similar" characteristics form a partnership, and the more diverse the characteristics, the smaller the partnership size.

Suggested Citation

  • Ludovic Renou, 2006. "Partnerships," School of Economics Working Papers 2006-05, University of Adelaide, School of Economics.
  • Handle: RePEc:adl:wpaper:2006-05

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    partnerships; coalitions; alliances; endogenous formation; efficiency gains; loss of control; diverse characteristics; opinions;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making


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