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The Gamma-Core and Coalition Formation

  • Parkash Chander

This paper reinterprets the gamma-core (Chander and Tulkens (1995, 1997)) and justifies it as well as its prediction that the efficient coalition structure is stable in terms of the coalition formation theory. It is assumed that coalitions can freely merge or break apart, are farsighted (that is, it is the final and not the immediate payoffs that matter to the coalitions) and a coalition may deviate if and only if it stands to gain from it. It is then shown that subsequent to a deviation by a coalition, the nonmembers will have incentives to break apart into singletons, as is assumed in the definition of the gamma-characteristic function, and that the grand coalition is the only stable coalition structure.

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File URL: http://repec.org/esNASM04/up.15639.1074153497.pdf
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Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 108.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:108
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  1. Licun Xue, 1998. "Coalitional stability under perfect foresight," Economic Theory, Springer, vol. 11(3), pages 603-627.
  2. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
  3. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
  4. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  5. Joseph Farrell & Garth Saloner, 1988. "Coordination through Committees and Markets," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 235-252, Summer.
  6. Parkash Chander & Henry Tulkens, 1995. "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," International Tax and Public Finance, Springer, vol. 2(2), pages 279-293, August.
  7. CHANDER, Parkash, 1998. "International treaties on global pollution: a dynamic time-path analysis," CORE Discussion Papers 1998054, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Belleflamme, Paul, 2000. "Stable Coalition Structures with Open Membership and Asymmetric Firms," Games and Economic Behavior, Elsevier, vol. 30(1), pages 1-21, January.
  9. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
  10. Scarf, Herbert E., 1971. "On the existence of a coopertive solution for a general class of N-person games," Journal of Economic Theory, Elsevier, vol. 3(2), pages 169-181, June.
  11. Debraj Ray & Rajiv Vohra, 1996. "A Theory of Endogenous Coalition Structure," Papers 0068, Boston University - Industry Studies Programme.
  12. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
  13. Moulin, Herve, 1987. "Egalitarian-Equivalent Cost Sharing of a Public Good," Econometrica, Econometric Society, vol. 55(4), pages 963-76, July.
  14. Effrosyni Diamantoudi & Licun Xue, . "Coalitions, Agreements and Efficiency," Economics Working Papers 2002-9, School of Economics and Management, University of Aarhus.
  15. TULKENS, Henry, 1997. "Cooperation vs. free riding in international environmental affairs: two approaches," CORE Discussion Papers 1997052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  16. Chander, Parkash, 1993. "Dynamic Procedures and Incentives in Public Good Economies," Econometrica, Econometric Society, vol. 61(6), pages 1341-54, November.
  17. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
  18. D. K. Foley, 1967. "Lindahl's Solution and the Core of an Economy with Public Goods," Working papers 3, Massachusetts Institute of Technology (MIT), Department of Economics.
  19. Chwe Michael Suk-Young, 1994. "Farsighted Coalitional Stability," Journal of Economic Theory, Elsevier, vol. 63(2), pages 299-325, August.
  20. Carsten Helm, 2001. "On the existence of a cooperative solution for a coalitional game with externalities," International Journal of Game Theory, Springer, vol. 30(1), pages 141-146.
  21. Roberts, Donald John, 1974. "The Lindahl solution for economies with public goods," Journal of Public Economics, Elsevier, vol. 3(1), pages 23-42, February.
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