Pricing group membership

Antonio Cabrales and Siddhartha Bandyopadhyay

No 15137, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We consider a model where agents differ in their `types' which determines their voluntary contribution towards a public good. We analyze what the equilibrium composition of groups are under centralized and centralized choice. We show that there exists a top-down sorting equilibrium i.e. an equilibrium where there exists a set of prices which leads to groups that can be ordered by level of types, with the first k types in the group with the highest price and so on. This exists both under decentralized and centralized choosing. We also analyze the model with endogenous group size and examine under what conditions is top-down sorting socially ecient. We illustrate when integration (i.e. mixing types so that each group's average type if the same) is socially better than top-down sorting. Finally, we show that top down sorting is efficient even when groups compete among themselves.

Keywords: Top-down sorting; Group-formation; Public good; Segregation; Integration (search for similar items in EconPapers)
JEL-codes: D02 D64 D71 H41 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://cepr.org/publications/DP15137 (application/pdf)

Related works:
Journal Article: Pricing group membership (2023)
Working Paper: Pricing group membership (2020)
Working Paper: Pricing group membership (2020)
Working Paper: Pricing Group Membership (2020)
Working Paper: Pricing group membership (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:15137

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP15137

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().