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Coalition Formation in Games without Synergies

  • Marco Marini

    (Istituto di Scienze Economiche, Università degli Studi di Urbino)

  • Sergio Currarini

    (Dipartimento di Scienze Economiche, Università Ca’ Foscari di Venezia)

This paper establishes sufficient conditions for the existence of a stable coalition structure in the ”coalition unanimity” game of coalition formation, first defined by Hart and Kurz (1983) and more recently studied by Yi (1997, 2000). Our conditions are defined on the strategic form game used to derive the payoffs the game of coalition formation. We show that if no synergies are generated by the formation of coalitions, a stable coalition structure always exists provided that players are symmetric and either the game exhibits strategic complementarity or, if strategies are substitutes, the best reply functions are contractions. We illustrate the role of synergies in a Cournot oligopoly example with cost reducing R&D.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.43.

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Date of creation: Mar 2004
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Handle: RePEc:fem:femwpa:2004.43
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  1. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
  2. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
  3. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
  4. Currarini, Sergio & Marini, Marco, 2002. "A conjectural cooperative equilibrium for strategic form games," MPRA Paper 33384, University Library of Munich, Germany.
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