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Economic integration as a partition function game

Author

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  • MORELLI, Massimo

    () (Iowa State University)

  • PENELLE, Philippe

    () (The Irving B.Harris Graduate School of Public Policy Studies, The University of Chicago)

Abstract

This paper provides a methodology to study coalition formation problems with externalities and heterogeneous players, when some subset of the players can act as “coalition developers” over time. The framework provided here allows to explicitly predict the timing of admission to coalitions, the equilibrium coalition structure and payoff distribution, as well as the equilibrium length of the admission game. We derive conditions on the availability of side-payments under which a union chooses to delay the admission of admissible countries. We show that the observed sequencing of admissions to the European Union is not consistent with the existence of perfectly competitive markets to price the admission of candidate countries. Welfare implications are derived.

Suggested Citation

  • MORELLI, Massimo & PENELLE, Philippe, 1997. "Economic integration as a partition function game," CORE Discussion Papers 1997085, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:1997085
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    File URL: https://uclouvain.be/en/research-institutes/immaq/core/dp-1997.html
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    Cited by:

    1. Bert Willems, 2000. "Cournot competition in the electricity market with transmission constraints," Energy, Transport and Environment Working Papers Series ete0004, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    2. László Á. Kóczy, 2001. "Accession Games: A Dynamic Per-Member Partition Function Aapproach," Game Theory and Information 0111002, EconWPA.
    3. Laszlo A Koczy, 2000. "The Core of a Partition Function Game," Working Papers Department of Economics ces0025, KU Leuven, Faculty of Economics and Business, Department of Economics.
    4. repec:spr:grdene:v:19:y:2010:i:3:d:10.1007_s10726-009-9161-2 is not listed on IDEAS
    5. László Á. Kóczy, 2010. "Strategic Aspects of the 1995 and 2004 EU Enlargements," Group Decision and Negotiation, Springer, vol. 19(3), pages 267-277, May.

    More about this item

    Keywords

    Admission paths; partition function; side-payments; European integration;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • F15 - International Economics - - Trade - - - Economic Integration

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