Stable Partitions in a Model with Group-Dependent Feasible Sets

Michel Le Breton and Shlomo Weber
Additional contact information
Michel Le Breton: Université de Toulouse I
Shlomo Weber: Department of Economics, Southern Methodist University

No 03-24, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: 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 thegroup, 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 the dimensionality of the set of alternatives and the existence of stable structures.

Keywords: feasible sets; stable partitions; positive externality; increasing and decreasing returns (search for similar items in EconPapers)
JEL-codes: C71 C72 D62 D71 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2003-05
New Economics Papers: this item is included in nep-cdm and nep-gth
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Working Paper: Stable partitions in a model with group-dependent feasible sets
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:0324

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