Cycles and Third-Party Payments in the Partnership Formation Problem

Jens Gudmundsson

No 2013:16, Working Papers from Lund University, Department of Economics

Abstract: We characterize the core of the partnership formation problem (Talman and Yang, Journal of Mathematical Economics 47, 2011) using cycles in the solution of a linear programming problem. The cycles also lead us to a new and intuitive sufficient condition for the existence of equilibrium, generalizing known results. We then introduce the partnership-stable equilibrium, a weakened solution concept in the sense that each equilibrium is also a partnership-stable equilibrium, and find sufficient and necessary conditions for its existence. Finally, we conduct a simulation study to see how often existence is an issue and which factors affect the rate at which problems have solutions.

Keywords: Partnership; equilibrium; linear programming; cycles; third-party payments (search for similar items in EconPapers)
JEL-codes: C62 D02 D60 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2013-05-30
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:lunewp:2013_016

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