Competitive Markets, Collective Decisions and Group Formation
49 Pages Posted: 17 Jun 2003
Date Written: May 2003
We consider a general equilibrium model where groups operating in a competitive market environment can have several members and make efficient collective consumption decisions. Individuals have the option to leave the group and make it on their own or join another group. We study the effect of these outside options on group formation, group stability, equilibrium existence, and equilibrium efficiency.
Keywords: Household Behavior, Household Formation, Collective Decision Making, General Equilibrium
JEL Classification: D10, D50, D62, D70
Suggested Citation: Suggested Citation