IDEAS home Printed from https://ideas.repec.org/p/ecm/nasm04/108.html
   My bibliography  Save this paper

The Gamma-Core and Coalition Formation

Author

Listed:
  • Parkash Chander

Abstract

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.

Suggested Citation

  • Parkash Chander, 2004. "The Gamma-Core and Coalition Formation," Econometric Society 2004 North American Summer Meetings 108, Econometric Society.
    • Handle: RePEc:ecm:nasm04:108
    as

    Download full text from publisher

    File URL: http://repec.org/esNASM04/up.15639.1074153497.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Parkash Chander & Henry Tulkens, 2006. "The Core of an Economy with Multilateral Environmental Externalities," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 153-175, Springer.
    2. Parkash Chander, 1998. "International Treaties on Global Pollution: A Dynamic Time-Path Analysis," Economics Working Paper Archive 400, The Johns Hopkins University,Department of Economics.
    3. Farrell, Joseph & Saloner, Garth, 1987. "Coordination Through Committees and Markets," Department of Economics, Working Paper Series qt5sn4b6v4, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    4. Nick Hanley & Henk Folmer (ed.), 1998. "Game Theory and the Environment," Books, Edward Elgar Publishing, number 1083.
    5. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    6. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    7. 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.
    8. Carlo Carraro (ed.), 2003. "The Endogenous Formation of Economic Coalitions," Books, Edward Elgar Publishing, number 2999.
    9. Chwe Michael Suk-Young, 1994. "Farsighted Coalitional Stability," Journal of Economic Theory, Elsevier, vol. 63(2), pages 299-325, August.
    10. Chander, Parkash & Khan, M. Ali, 2001. "International treaties on trade and global pollution," International Review of Economics & Finance, Elsevier, vol. 10(4), pages 303-324, December.
    11. Licun Xue, 1998. "Coalitional stability under perfect foresight," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(3), pages 603-627.
    12. Moulin, Herve, 1987. "Egalitarian-Equivalent Cost Sharing of a Public Good," Econometrica, Econometric Society, vol. 55(4), pages 963-976, July.
    13. Foley, Duncan K, 1970. "Lindahl's Solution and the Core of an Economy with Public Goods," Econometrica, Econometric Society, vol. 38(1), pages 66-72, January.
    14. Diamantoudi, Effrosyni & Xue, Licun, 2007. "Coalitions, agreements and efficiency," Journal of Economic Theory, Elsevier, vol. 136(1), pages 105-125, September.
    15. Parkash Chander & Henry Tulkens, 2006. "A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 176-193, Springer.
    16. Farrell, Joseph & Saloner, Garth, 1988. "Coordination Through Committees and Markets," Department of Economics, Working Paper Series qt08w115vq, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    17. TULKENS, Henry, 1998. "Cooperation versus free-riding in international environmental affairs: two approaches," LIDAM Reprints CORE 1339, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Ray, Debraj & Vohra, Rajiv, 1999. "A Theory of Endogenous Coalition Structures," Games and Economic Behavior, Elsevier, vol. 26(2), pages 286-336, January.
    19. Joseph Farrell & Garth Saloner, 1988. "Coordination through Committees and Markets," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 235-252, Summer.
    20. Carsten Helm, 2001. "On the existence of a cooperative solution for a coalitional game with externalities," International Journal of Game Theory, Springer;Game Theory Society, vol. 30(1), pages 141-146.
    21. TULKENS, Henry, 1997. "Cooperation vs. free riding in international environmental affairs: two approaches," LIDAM Discussion Papers CORE 1997052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    22. Chander, Parkash, 1993. "Dynamic Procedures and Incentives in Public Good Economies," Econometrica, Econometric Society, vol. 61(6), pages 1341-1354, November.
    23. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
    24. R. M. Thrall & W. F. Lucas, 1963. "N‐person games in partition function form," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 10(1), pages 281-298, March.
    25. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-1064, July.
    26. Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, April.
    27. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
    28. Roberts, Donald John, 1974. "The Lindahl solution for economies with public goods," Journal of Public Economics, Elsevier, vol. 3(1), pages 23-42, February.
    29. Belleflamme, Paul, 2000. "Stable Coalition Structures with Open Membership and Asymmetric Firms," Games and Economic Behavior, Elsevier, vol. 30(1), pages 1-21, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ray, Debraj & Vohra, Rajiv, 2015. "Coalition Formation," Handbook of Game Theory with Economic Applications,, Elsevier.
    2. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2018. "International Environmental Agreements—The Role of Foresight," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(1), pages 241-257, September.
    3. Maria Montero, 2023. "Coalition Formation in Games with Externalities," Dynamic Games and Applications, Springer, vol. 13(2), pages 525-548, June.
    4. Wood, Peter John, 2010. "Climate Change and Game Theory: a Mathematical Survey," Working Papers 249379, Australian National University, Centre for Climate Economics & Policy.
    5. Sudhir A. Shah, 2006. "A Non-Cooperative Theory Of Quantity-Rationing International Transfrontier Pollution," Working papers 143, Centre for Development Economics, Delhi School of Economics.
    6. Carraro, Carlo & Bosello, Francesco & Buchner, Barbara & Raggi, Davide, 2003. "Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations," CEPR Discussion Papers 3606, C.E.P.R. Discussion Papers.
    7. Johan Eyckmans & Michael Finus, 2007. "Measures to enhance the success of global climate treaties," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 7(1), pages 73-97, March.
    8. Carlo Carraro & Carmen Marchiori, 2003. "Stable coalitions," Chapters, in: Carlo Carraro (ed.), The Endogenous Formation of Economic Coalitions, chapter 5, Edward Elgar Publishing.
    9. Michael Finus & Bianca Rundshagen, 2005. "Participation in International Environmental Agreements: The Role of Timing and Regulation," Working Papers 2005.45, Fondazione Eni Enrico Mattei.
    10. Baran Doda & Simon Quemin & Luca Taschini, 2017. "A Theory of Gains from Trade in Multilaterally Linked ETSs," Working Papers 1706, Chaire Economie du climat.
    11. Carlo Carraro & Carmen Marchiori & Sonia Oreffice, 2009. "Endogenous Minimum Participation in International Environmental Treaties," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(3), pages 411-425, March.
    12. Porchiung Chou & Cheickna Sylla, 2008. "The formation of an international environmental agreement as a two-stage exclusive cartel formation game with transferable utilities," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 317-341, December.
    13. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal transfers and participation decisions in international environmental agreements," The Review of International Organizations, Springer, vol. 1(4), pages 379-396, December.
    14. Effrosyni Diamantoudi & Eftichios Sartzetakis, 2015. "International environmental agreements: coordinated action under foresight," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(3), pages 527-546, August.
    15. László Á. Kóczy, 2018. "Partition Function Form Games," Theory and Decision Library C, Springer, number 978-3-319-69841-0, September.
    16. Johan Eyckmans & Michael Finus, 2006. "New roads to international environmental agreements: the case of global warming," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(4), pages 391-414, December.
    17. BRECHET, Thierry & GERARD, François & TULKENS, Henry, 2007. "Climate coalitions: a theoretical and computational appraisal," LIDAM Discussion Papers CORE 2007003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Sergio Currarini & Marco A. Marini, 2015. "Coalitional Approaches to Collusive Agreements in Oligopoly Games," Manchester School, University of Manchester, vol. 83(3), pages 253-287, June.
    19. A. Caparrós & J.-C. Péreau & T. Tazdaït, 2004. "North-South Climate Change Negotiations: A Sequential Game with Asymmetric Information," Public Choice, Springer, vol. 121(3), pages 455-480, February.
    20. Michael Finus & Bianca Rundshagen, 2003. "How the Rules of Coalition Formation Affect Stability of International Environmental Agreements," Working Papers 2003.62, Fondazione Eni Enrico Mattei.

    More about this item

    Keywords

    strategic games; coalition formation; farsighted; core; characteristic function;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecm:nasm04:108. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/essssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.