Group Formation with Heterogeneous Feasible Sets

Michel Breton and Shlomo Weber
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Michel Breton: Université de Toulouse I
Shlomo Weber: Southern Methodist University

Chapter 16 in Institutions, Equilibria and Efficiency, 2006, pp 295-315 from Springer

Abstract: Summary In this paper we consider a model of group formation where group of individuals may have different feasible sets. We focus on two polar cases, increasing returns, when the set of feasible alternatives increases if a new member joins the group, and decreasing returns, when a new member has an opposite effect and reduces the number of alternatives available for the enlarged group. We consider two notions, stability and strong stability of group structures, that correspond to Nash and Strong Nash equilibrium of the associated non-cooperative game. We prove existence results for various classes of environments and also investigate the link between dimensionality of feasible sets and the existence of stable structures.

Keywords: Feasible sets; Stable partitions; Positive externality; Increasing Returns; Decreasing Returns (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:spr:steccp:978-3-540-28161-0_16

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DOI: 10.1007/3-540-28161-4_16

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