An Almost Ideal Sharing Scheme for Coalition Games with Externalities

Johan Eyckmans () and Michael Finus ()

No 2004.155, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We propose a class of sharing schemes for the distribution of the gains from cooperation for coalition games with externalities. In the context of the partition function, it is shown that any member of this class of sharing schemes leads to the same set of stable coalitions in the sense of d’Aspremont et al. (1983). These schemes are “almost ideal” in that they stabilize these coalitions which generate the highest global welfare among the set of “potentially stable coalitions”. Our sharing scheme is particularly powerful for economic problems that are characterized by positive externalities from coalition formation and which therefore are likely to suffer from severe free-riding.

Keywords: Coalition games; Partition function; Externalities; Sharing schemes (search for similar items in EconPapers)
JEL-codes: C70 C71 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

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