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A Competitive Partnership Formation Process

  • Tommy Andersson
  • Jens Gudmundsson
  • Dolf Talman
  • Zaifu Yang

A group of heterogenous agents may form partnerships in pairs. All single agents as well as all partnerships generate values. If two agents choose to cooperate, they need to specify how to split their joint value among one another. In equilibrium, which may or may not exist, no agents have incentives to break up or form new partnerships. This paper proposes a dynamic competitive adjustment process that always either finds an equilibrium or exclusively proves the nonexistence of any equilibrium in finitely many steps. When an equilibrium exists, partnership and revenue distribution will be automatically and endogenously determined by the process. Moreover, several fundamental properties of the equilibrium solution and the model are derived.

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Paper provided by Department of Economics, University of York in its series Discussion Papers with number 13/04.

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Date of creation: Jan 2013
Date of revision:
Handle: RePEc:yor:yorken:13/04
Contact details of provider: Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
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  1. Debasis Mishra & Dolf Talman, 2008. "Characterization of the walrasian equilibria of the assignment model," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-07, Indian Statistical Institute, New Delhi, India.
  2. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
  3. Andersson, Tommy & Svensson, Lars-Gunnar, 2008. "Non-manipulable assignment of individuals to positions revisited," Mathematical Social Sciences, Elsevier, vol. 56(3), pages 350-354, November.
  4. Demange, Gabrielle & Gale, David, 1985. "The Strategy Structure of Two-sided Matching Markets," Econometrica, Econometric Society, vol. 53(4), pages 873-88, July.
  5. Johan Karlander & Kimmo Eriksson, 2001. "Stable outcomes of the roommate game with transferable utility," International Journal of Game Theory, Springer, vol. 29(4), pages 555-569.
  6. Talman, Dolf & Yang, Zaifu, 2011. "A model of partnership formation," Journal of Mathematical Economics, Elsevier, vol. 47(2), pages 206-212, March.
  7. Andersson, T.D. & Andersson, C. & Talman, A.J.J., 2010. "Sets in Excess Demand in Ascending Auctions with Unit-Demand Bidders," Discussion Paper 2010-51, Tilburg University, Center for Economic Research.
  8. Qin, Cheng-Zhong, 1996. "Endogenous Formation of Cooperation Structures," Journal of Economic Theory, Elsevier, vol. 69(1), pages 218-226, April.
  9. Andersson, Tommy & Erlanson, Albin, 2012. "Multi-Item Vickery-English-Dutch Auctions," Working Papers 2012:17, Lund University, Department of Economics, revised 15 Jan 2013.
  10. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
  11. Ning Sun & Zaifu Yang, 2003. "A General Strategy Proof Fair Allocation Mechanism," Center for Mathematical Economics Working Papers 346, Center for Mathematical Economics, Bielefeld University.
  12. Bettina Klaus & Alexandru Nichifor, 2010. "Consistency in one-sided assignment problems," Social Choice and Welfare, Springer, vol. 35(3), pages 415-433, September.
  13. Sun, Ning & Yang, Zaifu, 2003. "A general strategy proof fair allocation mechanism," Economics Letters, Elsevier, vol. 81(1), pages 73-79, October.
  14. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
  15. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
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