Sharing the surplus in games with externalities within and across issues

Effrosyni Diamantoudi (), Ines Macho-Stadler, David Perez-Castrillo and Licun Xue ()

Economic Theory, 2015, vol. 60, issue 2, 315-343

Abstract: We consider issue-externality games in which agents can cooperate on multiple issues and externalities are present both within and across issues, that is, the amount a coalition receives in one issue depends on how the players are organized on all the issues. Examples of such games are several firms competing in multiple markets, and countries negotiating both a trade agreement (through, e.g., WTO) and an environmental agreement (e.g., Kyoto Protocol). We propose a way to extend (Shapley) values for partition function games to issue-externality games. We characterize our proposal through axioms that extend the Shapley axioms to our more general environment. The solution concept that we propose can be applied to many interesting games, including inter-temporal situations where players meet sequentially. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Externalities; Cooperative game theory; Shapley value; Linked issues; C71; D62 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (10)

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Working Paper: Sharing the surplus in games with externalities within and across issues (2015)
Working Paper: Sharing the surplus in games with externalities within and across issues (2011)
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DOI: 10.1007/s00199-015-0867-x

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