Contractually stable alliances
Ana Mauleon (),
José Sempere-Monerris () and
Vincent Vannetelbosch ()
No 2013031, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)
We analyze how different rules for exiting an alliance (simple majority, unanimity or unanimity with side payments) will affect the formation of strategic alliances. We find that no alliance structure is contractually stable under the simple majority rule. Once unanimous consent is required, asymmetric alliance structures consisting of two alliances are contractually stable. In addition, the grand alliance which is the efficient structure is stable. Allowing for side payments to compensate former partners improves efficiency. Finally, we show that different rules of exit may coexist in different alliances in the long run.
Keywords: strategic alliances; coalition formation; contractual stability; exit rules (search for similar items in EconPapers)
JEL-codes: C70 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-mic
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Journal Article: Contractually Stable Alliances (2016)
Working Paper: Contractually Stable Alliances (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2013031
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