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Cores of games with positive externalities

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  • CHANDER, Parkash

    () (National University of Singapore and Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

Abstract

This paper introduces a core concept, called the γ-core, in the primitive framework of a strategic game. For a certain class of strategic games, it is a weaker concept than the strong Nash equilibrium, but in general stronger than the conventional α- and β- cores. We argue that the coalition formation process is an infinitely repeated game and show that the grand coalition forms if the γ-core is nonempty. This is a weaker sufficient condition than the previous such condition (Maskin (2003, Theorem 4)). As an application of this result, it is shown that the γ- core of an oligopolistic market is nonempty and thus the grand coalition forms.

Suggested Citation

  • CHANDER, Parkash, 2010. "Cores of games with positive externalities," CORE Discussion Papers 2010004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2010004
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    File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2010_4web.pdf
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    Cited by:

    1. Pham Do, Kim Hang & Dinar, Ariel & McKinney, Daene, 2011. "Can issue linkage help mitigate externalities and enhance cooperation," MPRA Paper 37408, University Library of Munich, Germany.
    2. Parkash Chander & Myrna Wooders, 2010. "Subgame Perfect Cooperation in an Extensive Game," Vanderbilt University Department of Economics Working Papers 1008, Vanderbilt University Department of Economics.

    More about this item

    Keywords

    positive externalities; strategic game; core; repeated game; coalition formation;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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