Stable Coalitions

47 Pages Posted: 11 Apr 2002

See all articles by Carlo Carraro

Carlo Carraro

Ca' Foscari University of Venice; CMCC - Euro Mediterranean Centre for Climate Change (Climate Policy Division); IPCC; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Centre for European Policy Studies, Brussels; Green Growth Knowledge Platform

Carmen Marchiori

Fondazione Eni Enrico Mattei (FEEM); University College London

Multiple version iconThere are 2 versions of this paper

Date Written: March 2002

Abstract

This Paper examines recent theoretical developments in the theory of coalition stability. It focuses on the relationship between the incentives to defect from a coalition, the size of the resulting equilibrium coalition structure and the different assumptions on membership rules, coalition behaviour, players' conjectures, etc. The Paper considers several cases. Simultaneous versus sequential moves, linear versus circular order of moves, Nash versus rational conjectures, open versus exclusive membership, monotonic versus non-monotonic payoff functions and orthogonal versus non-orthogonal reaction functions. The profitable and stable coalition will be derived for each possible configuration of the rules of the game, the pay-off functions and the membership rules. The results show that the size of the profitable and stable coalition highly depends on the chosen configuration and that the equilibrium outcome ranges from a small coalition with a few signatories to full cooperation. The Paper explores under which conditions a large stable coalition is likely to emerge, and identifies the institutional setting that favours the emergence of such coalition.

Keywords: Agreements, coaltions, incentives, negotiations, stability

JEL Classification: H00, H20, H30

Suggested Citation

Carraro, Carlo and Marchiori, Carmen, Stable Coalitions (March 2002). Available at SSRN: https://ssrn.com/abstract=306827

Carlo Carraro (Contact Author)

Ca' Foscari University of Venice ( email )

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Green Growth Knowledge Platform ( email )

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Carmen Marchiori

Fondazione Eni Enrico Mattei (FEEM) ( email )

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Venezia, 30122
Italy
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+39 041 271 1461 (Fax)

University College London

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