NO : WP-2023-011
AUTHOR : Japneet Kaur
TITLE : STABLE SETS IN ECONOMIES WITH CLUB GOODS
In an economy with club goods, we introduce the concept of von Neumann-Morgensetern stable sets. Our main result provides a correspondence between stable sets of a club economy comprising a continuum of agents and finitely many types with those that form in the related finite economy. Along with the trade in private goods, agents in our economy can belong to multiple clubs. A club is characterised by the undertaking in which it is engaged and the external attributes of its members. Further, inspired by Harsanyi , we also bring in the notion of ‘sophisticated stability’ and show an equivalence between ‘sophisticated stable sets’ in the utility space with those that form in the allocation space.
Key words: Club goods, Stable sets of allocations, Stable sets of payoffs, Core, Sophisticated
JEL Code: D50, D51, D60, D61, D71