Group Formation in Economics

Broad and diverse ranges of activities are conducted within and by organized groups of individuals, including political, economic and social activities. These activities have become a subject of intense interest in economics and game theory. Some of the topics investigated in this 2005 collection are models of networks of power and privilege, trade networks, co-authorship networks, buyer-seller networks with differentiated products, and networks of medical innovation and the adaptation of new information. Other topics are social norms on punctuality, clubs and the provision of club goods and public goods, research and development and collusive alliances among corporations, and international alliances and trading agreements. While relatively recent, the literature on game theoretic studies of group formation in economics is already vast. This volume provides an introduction to this important literature on game-theoretic treatments of situations with networks, clubs, and coalitions, including some applications.Part I. Strategic Approach to Network Formation: 1. A survey of models of network formation: stability and efficiency Matthew O. Jackson; 2. Models of network formation in cooperative games Anne van den Nouweland; 3. Farsighted stability in network formation Frank H. Page, Jr. and Samir Kamat; 4. Learning in networks Sanjeev Goyal; Part II. On Equilibrium Formation of Groups: A Theoretical Assessment: 5. Group formation: the interaction of increasing returns and preferences diversity Gabrielle Demange; 6. Games and economies with near exhaustion of gains to scale Alexander Kovalenkov and Myrna Wooders; 7. Coalitions and clubs: Tiebout equilibrium in large economies John Conley and Stefani Smith; 8. Secession-proof cost allocations and stable group structures Michel Le Breton and Shlomo Weber; Part III. Groups, Clubs, Alliances in Political and Economic Environments: 9. Political parties and coalition formation Amrita Dhillon; 10. Design of constitutional rules: Banzhof power index, design of rules Mika Widgren; 11. Group and network formation in industrial organization: a survey Francis Bloch; 12. Institution design for managing global commons: lessons from coalition theory Carlo Carraro; 13. Inequality and growth clubs Fernando Jaramillo, Hubert Kempf and Fabien Moizeau; 14. Informal insurance, enforcement constraints, and group formation Garance Genicot and Debraj Ray; 15. Spontaneous market emergence and social networks Marcel Fafchamps.