Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/117951
Authors: 
Caparrós, Alejandro
Hammoudi, Abdelhakim
Tazdaït, Tarik
Year of Publication: 
2004
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 70.2004
Abstract: 
We propose a framework to analyze coalition formation with heterogeneous agents. Existing literature defines stability conditions that do not ensure that, once an agent decides to sign an agreement, the enlarged coalition is feasible. Defining the concepts of refraction and exchanging, we set up conditions of existence and enlargement of a coalition with heterogeneous agents. We use the concept of exchanging agents to give necessary conditions for internal stability and show that refraction is a sufficient condition for the failure of an enlargement of the coalition. With heterogeneous agents we can get a situation where a group of members of an unstable coalition does not deviate, neither within the coalition nor within the extended coalition. Hence, the possibilities of agreement are richer than in the standard analysis with homogeneous agents. Examples of industrial economics are used for illustration, and an application to climate change negotiations is discussed in more detail.
Subjects: 
Heterogeneity
Coalition
Exchanging
Refraction
Global Externalities
JEL: 
C72
D74
Q28
Document Type: 
Working Paper

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