A Model of Partnership Formation

CentER Discussion Paper Series No. 2008-103

16 Pages Posted: 15 Dec 2008

See all articles by Dolf Talman

Dolf Talman

Tilburg University - Department of Econometrics & Operations Research

Zaifu Yang

Yokohama National University - Faculty of Business Administration; Tilburg University - Department of Econometrics & Operations Research

Date Written: December 10, 2008

Abstract

This paper presents a model of partnership formation. A set of agents wants to conduct some business or other activities. Agents may act alone or seek a partner for cooperation and need in the latter case to consider with whom to cooperate and how to share the profit in a collaborative and competitive environment. We provide necessary and sufficient conditions under which an equilibrium can be attained.

In equilibrium, the partner formation and the payoff distribution are endogenously determined. Every agent realizes his full potential and has no incentive to deviate from either staying independent or from the endogenously determined partner and payoff. The partnership formation problem contains the classical assignment market problem as a special case.

Keywords: Partnership formation, equilibrium, indivisibility, assignment market

JEL Classification: C62, C72, D02

Suggested Citation

Talman, Dolf J. J. and Yang, Zaifu, A Model of Partnership Formation (December 10, 2008). CentER Discussion Paper Series No. 2008-103, Available at SSRN: https://ssrn.com/abstract=1316246 or http://dx.doi.org/10.2139/ssrn.1316246

Dolf J. J. Talman (Contact Author)

Tilburg University - Department of Econometrics & Operations Research ( email )

Tilburg, 5000 LE
Netherlands
+31 13 466 2346 (Phone)

Zaifu Yang

Yokohama National University - Faculty of Business Administration ( email )

79-4 Tokiwa-dai Hodogaya-ku
Yokohama, Kanagawa, 2408501
Japan

Tilburg University - Department of Econometrics & Operations Research ( email )

P.O. Box 90153
5000 LE Tilburg
Netherlands