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Coalition Formation in Games without Synergies

Author

Listed:
  • Marco Marini

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

  • Sergio Currarini

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

Abstract

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.

Suggested Citation

  • Marco Marini & Sergio Currarini, 2004. "Coalition Formation in Games without Synergies," Working Papers 2004.43, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2004.43
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    References listed on IDEAS

    as
    1. Currarini, Sergio & Marini, Marco, 2002. "A conjectural cooperative equilibrium for strategic form games," MPRA Paper 33381, University Library of Munich, Germany.
    2. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    3. Carraro,Carlo & Siniscalco,Domenico (ed.), 1997. "New Directions in the Economic Theory of the Environment," Cambridge Books, Cambridge University Press, number 9780521590891.
    4. Carlo Carraro (ed.), 2003. "The Endogenous Formation of Economic Coalitions," Books, Edward Elgar Publishing, number 2999.
    5. 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.
    6. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-1064, July.
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    Cited by:

    1. 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.
    2. Aldashev, Gani & Marini, Marco & Verdier, Thierry, 2014. "Brothers in alms? Coordination between nonprofits on markets for donations," Journal of Public Economics, Elsevier, vol. 117(C), pages 182-200.
    3. Marco Marini & Giorgio Rodano, 2012. "Sequential vs Collusive Payoffs in Symmetric Duopoly Games," DIAG Technical Reports 2012-06, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    4. Marco A. Marini, 2007. "An Overview of Coalitions and Networks Formation Models for Economic Applications," Working Papers 0707, CREI Università degli Studi Roma Tre, revised 2007.
    5. Marco Marini & Giorgio Rodano, 2011. "Lead, Follow or Cooperate? Endogenous Timing & Cooperation in Symmetric Duopoly Games," Working Papers 1112, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
    6. Sergio Currarini & Marco Marini, 2012. "Majority Rules and Coalition Stability," DIAG Technical Reports 2012-01, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    7. Marco Marini, 2007. "An Overview of Coalition & Network Formation Models for Economic Applications," Working Papers 0712, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2007.
    8. Sergio Currarini & Marco A. Marini, 2013. "Majority Rule and Coalitional Stability," Economics Bulletin, AccessEcon, vol. 33(3), pages 1660-1668.

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    More about this item

    Keywords

    Coalition formation; Synergies; Strong Nash equilibrium;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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