A Non-Cooperative Foundation of Core-Stability in Positive Externality Ntu-Coalition Games

21 Pages Posted: 13 May 2003

See all articles by Michael Finus

Michael Finus

University of Stirling

Bianca Rundshagen

University of Hagen

Date Written: March 2003

Abstract

We identify the core as an appealing stability concept of cooperative game theory, but argue that the non-cooperative approach has conceptual advantages in the context of economic problems with externalities. Therefore, we derive a non-cooperative foundation of core-stability for positive externality NTU-games. First, in the spirit of Hart/Kurz (1983), we develop a game that we call - game and show that strong Nash equilibria coalition structures in this game are identical to - and - core stable coalition structures. Second, as a by-product of the definition of the - game, we develop an extension called an - game. Finally, we compare equilibria in the - and - game with those in the - and - game of Hart and Kurz (1983).We identify the core as an appealing stability concept of cooperative game theory, but argue that the non-cooperative approach has conceptual advantages in the context of economic problems with externalities.

Keywords: Core-stability, Non-cooperative Game Theory, Positive Externality Games

JEL Classification: C72

Suggested Citation

Finus, Michael and Rundshagen, Bianca, A Non-Cooperative Foundation of Core-Stability in Positive Externality Ntu-Coalition Games (March 2003). FEEM Working Paper No. 31.2003. Available at SSRN: https://ssrn.com/abstract=406400 or http://dx.doi.org/10.2139/ssrn.406400

Michael Finus (Contact Author)

University of Stirling ( email )

Stirling, Scotland FK9 4LA
United Kingdom

Bianca Rundshagen

University of Hagen ( email )

Profilstr. 8
Hagen, D-58084
Germany

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