A sequential approach to the characteristic function and the core in games with externalities

Marco Marini () and Sergio Currarini ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper proposes a formulation of coalitional payoff possibilities in games with externalities, based on the assumption that forming coalitions can exploit a ”first mover advantage”. We derive a characteristic function and show that when outside players play their best response noncooperatively, the core is nonempty in games with strategic complements. We apply this result to Cournot and Bertrand games and to public goods economies.

Keywords: Core; cooperative games; externalities (search for similar items in EconPapers)
JEL-codes: C70 C71 (search for similar items in EconPapers)
Date: 2003, Revised 2003
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:1689

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