An almost ideal sharing scheme for coalition games with externalities

Johan Eyckmans, Michael Finus

Research output: Working paperDiscussion paper

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.

Original languageEnglish
Place of PublicationUK
PublisherUniversity of Stirling
Publication statusPublished - 2009

Publication series

NameDiscussion Paper
PublisherUniversity of Stirling
Volume2009-10

Keywords

  • cooperative games (C710)
  • general (C700)
  • Game theory and bargaining theory

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    Eyckmans, J., & Finus, M. (2009). An almost ideal sharing scheme for coalition games with externalities. (Discussion Paper; Vol. 2009-10). University of Stirling.