The Role of Mobility among Regions in Coordination

Hitoshi Matsushima

No CIRJE-F-53, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: We investigate multiple regions in which coordination games are exclusively played by their participants. For every region, there exist a number of immobile individuals locked into this region. There also exist mobile individuals who look out for chances to move into more beneficial regions, but the ranges of regions into which they can move may be limited. All individuals intend to maximize their payoffs in a self-fulfilling way but they sometimes choose non-optimal strategies with a small probability. It is shown that when there exist sufficiently many individuals who are mobile in limited ways, all regions except the least productive region are well coordinated in the long-run of adjustment dynamics. This possibility result holds irrespective of how pessimistic individuals are. On the other hand, when the ranges of regions into which mobile individuals can move are expanded too much, all regions except the most productive region fall into coordination failure and the distributive inequality between immobile and mobile individuals increases very badly. Moreover, we argue that the policy interventions in the least productive region give the powerful spillover effect on facilitating coordination in the other regions.

Pages: 26 pages
Date: 1999-06
New Economics Papers: this item is included in nep-cdm and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:99cf53

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