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Clubs and the Market: Continuum Economies

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

Abstract

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 their clubs. The space of agents is a continuum, but clubs are finite. It is shown that (i) competitive equilibria exist, and (ii) the core coincides with the set of equilibrium states. The central subtlety is in modeling club memberships and expressing the notion that membership choices are consistent across the population.
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Suggested Citation

  • Ellickson, Bryan & Grodal, Birgit & Scotchmer, Suzanne & Zame, William R., 1997. "Clubs and the Market: Continuum Economies," Department of Economics, Working Paper Series qt7n5699xj, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  • Handle: RePEc:cdl:econwp:qt7n5699xj
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    References listed on IDEAS

    as
    1. Engl, Greg & Scotchmer, Suzanne, 1996. "The core and the hedonic core: Equivalence and comparative statics," Journal of Mathematical Economics, Elsevier, vol. 26(2), pages 209-248.
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    3. Schmeidler, David, 1969. "Competitive Equilibria in Markets with a Continuum of Traders and Incomplete Preferences," Econometrica, Econometric Society, vol. 37(4), pages 578-585, October.
    4. Greg Engl & Suzanne Scotchmer, 1997. "The law of supply in games, markets and matching models (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(3), pages 539-550.
    5. Scotchmer, Suzanne, 1996. "Externality pricing in club economies," Ricerche Economiche, Elsevier, vol. 50(4), pages 347-366, December.
    6. Ellickson, Bryan, 1973. "A Generalization of the Pure Theory of Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 417-432, June.
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    8. Cole, Harold L. & Prescott, Edward C., 1997. "Valuation Equilibrium with Clubs," Journal of Economic Theory, Elsevier, vol. 74(1), pages 19-39, May.
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    13. Scotchmer, Suzanne, 1985. "Profit-maximizing clubs," Journal of Public Economics, Elsevier, vol. 27(1), pages 25-45, June.
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    15. Gilles, Robert P. & Scotchmer, Suzanne, 1997. "Decentralization in Replicated Club Economies with Multiple Private Goods," Journal of Economic Theory, Elsevier, vol. 72(2), pages 363-387, February.
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    25. Hammond, Peter J. & Kaneko, Mamoru & Wooders, Myrna Holtz, 1989. "Continuum economies with finite coalitions: Core, equilibria, and widespread externalities," Journal of Economic Theory, Elsevier, vol. 49(1), pages 113-134, October.
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    Cited by:

    1. Ellickson, Bryan & Grodal, Birgit & Scotchmer, Suzanne & Zame, William R., 2001. "Clubs and the Market: Large Finite Economies," Journal of Economic Theory, Elsevier, vol. 101(1), pages 40-77, November.
    2. Harold L. Cole & George J. Mailath & Andrew Postlewaite, "undated". "Efficient Non-Contractible Investments," Penn CARESS Working Papers 08d6793d32cab8f6e1f46dac0, Penn Economics Department.

    More about this item

    Keywords

    clubs; continuum models; public goods; Business; Social and Behavioral Sciences;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • H4 - Public Economics - - Publicly Provided Goods

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