Coalition Formation with Local Public Goods and Network Effect

Fan-chin Kung

Game Theory and Information from University Library of Munich, Germany

Abstract: Many local public goods are provided by coalitions and some of them have network effects. Namely, people prefer to consume a public good in a coalition with more members. This paper adopts the Drèze and Greenberg (1980) type utility function where players have preferences over goods as well as coalition members. In a game with anonymous and separable network effect, the core is nonempty when coalition feasible sets are monotonic and players' preferences over public goods have connected support. All core allocations consist of connected coalitions and they are Tiebout equilibria as well. We also examine the no-exodus equilibrium for games whose feasible sets are not monotonic.

Keywords: Coalition formation; core; network effect; local public goods (search for similar items in EconPapers)
JEL-codes: C71 D71 H41 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2005-06-28
New Economics Papers: this item is included in nep-net, nep-pbe and nep-ure
Note: Type of Document - pdf; pages: 17
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpga:0506007

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