Coalition Formation in Games Without Synergies

FEEM Working Paper No. 43.04

International Game Theory Review (IGTR), Vol. 8, No. 1, pp. 111-126, World Scientific Publishing Co. Pte. Ltd., 2006

23 Pages Posted: 24 Apr 2004

See all articles by Sergio Currarini

Sergio Currarini

University of Leicester - Department of Economics; Ca Foscari University of Venice - Dipartimento di Economia

Marco A. Marini

University of Rome La Sapienza; CREI, University Rome III

Date Written: March 2004

Abstract

This paper establishes sufficient conditions for the existence of a stable coalition structure in the "coalition unanimity" game of coalition formation, first defined by Hart and Kurz (1983) and more recently studied by Yi (1997, 2000). Our conditions are defined on the strategic form game used to derive the payoffs the game of coalition formation. We show that if no synergies are generated by the formation of coalitions, a stable coalition structure always exists provided that players are symmetric and either the game exhibits strategic complementarity or, if strategies are substitutes, the best reply functions are contractions. We illustrate the role of synergies in a Cournot oligopoly example with cost reducing R&D.

Keywords: coalition formation, synergies, strong nash equilibrium

JEL Classification: C7

Suggested Citation

Currarini, Sergio and Marini, Marco A., Coalition Formation in Games Without Synergies (March 2004). FEEM Working Paper No. 43.04, International Game Theory Review (IGTR), Vol. 8, No. 1, pp. 111-126, World Scientific Publishing Co. Pte. Ltd., 2006, Available at SSRN: https://ssrn.com/abstract=524522

Sergio Currarini

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

Marco A. Marini (Contact Author)

University of Rome La Sapienza ( email )

Piazzale Aldo Moro, 5
Rome, 00181
Italy
+39 06 49910843 (Phone)

HOME PAGE: http://sites.google.com/a/uniroma1.it/marcomarini-eng/

CREI, University Rome III ( email )

Via Ostiense, 161
Rome, 00154
Italy

HOME PAGE: http://host.uniroma3.it/centri/crei/

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