guarding the guardians good government requires some restraints on the powerful but how can those be impose if there is no one above them this paper studies the equilibrium allocation of power and resources established by self interested incumbents under the threat of rebellions from inside and outside the group in power commitment to uphold individuals rights can only be achieved if power is not as concentrated as incumbents would like it to be ex post power sharing endogenously enables incumbents to commit to otherwise time inconsistent laws by ensuring more people receive rents under the status quo and thus want to defend it

multi product newsboy problem with limited capacity and outsourcing this paper considers a multi product newsboy system that produces multiple products for fulfilling independently uncertain demands which share the same production capacity to deal with possible shortage of limited capacity productions can be outsourced we consider two outsourcing strategies zero lead time outsourcing and nonzero lead time outsourcing the structural properties and solution procedures for the profit maximization models are developed numerical results are provided for obtaining some managerial insights

multi product budget constrained acquisition and pricing with uncertain demand and supplier quantity discounts abstract we consider the joint acquisition and pricing problem where the retailer sells multiple products with uncertain demands and the suppliers provide all unit quantity discounts the problem is to determine the optimal acquisition quantities and selling prices so as to maximize the retailer s expected profit subject to a budget constraint this is the first extension to consider supplier discounts in the constrained multi product newsvendor pricing problem we establish a mixed integer nonlinear programming minlp model to formulate the problem and develop a lagrangian based solution approach computational results for the test problems involving up to thousand products are reported which show that the proposed approach can obtain high quality solutions in a very short time

pillage and property this paper introduces a class of coalitional games called pillage games as a model of hobbesian anarchy any coalition can pillage costlessly and with certainty any less powerful coalition power is endogenous so a pillage game does not have a characteristic function but pillage provides a domination concept that defines a stable set which represents an endogenous balance of power every stable set contains only finitely many allocations and can be represented as a farsighted core additional results are obtained for particular games including the game in which the power of each coalition is determined by its total wealth

residential energy demand and the interaction of price and temperature british experimental evidence the responsiveness of heating energy demand to pricing is shown to be dependent on temperature and vice versa this is investigated empirically using residential electricity demand data obtained under conditions of price variation from a british time of use pricing experiment results confirm that consumer responses to higher electricity prices are conditional on temperature levels particularly during the daytime and for households with high overall levels of electricity consumption and previous experience of time of use tariffs

measuring climatic impacts on energy consumption a review of the empirical literature abstract this paper reviews the literature on the relationship between climate and the energy sector in particular we primarily discuss empirical papers published in peer reviewed economics journals focusing on how climate affects energy expenditures and consumption climate will affect energy consumption by changing how consumers respond to short run weather shocks the intensive margin as well as how people will adapt in the long run the extensive margin along the intensive margin further research that uses household and firm level panel data of energy consumption may help identify how energy consumers around the world respond to weather shocks research on technology adoption e g air conditioners will further our understanding of the extensive margin adjustments and their costs we also note that most of the literature focuses on the residential sector similar studies are urgently needed for the industrial and commercial sectors

evolutionary stability in games of communication abstract this paper identifies evolutionarily stable outcomes in games in which one player has private information and the other takes a payoff relevant action the informed player can communicate at little cost outcomes satisfying a set valued evolutionary stability condition must exist and be efficient in common interest games when there is a small cost associated with using each message the outcome preferred by the informed player is stable the paper introduces a nonequilibrium set valued stability notion of entry resistant sets for games with partial common interest the no communication outcome is never an element of an entry resistant set journal of economic literature classification numbers c72 d82

the impact of natural disaster on energy consumption international evidence abstract this research shows that natural disasters may hurt energy consumption by using data on 123 countries over the period 1990 2015 and classifying them according to their economic development level and region based on world development indicators we employ a two step system gmm method to examine the effect of natural disasters on energy consumption presenting findings that support our hypotheses in the models and show a strong negative effect for low income countries or those in the africa region after considering an alternative proxy for natural disaster we implement quantile regression methods their results find that natural disasters exhibit a negative and significant impact on oil renewable and nuclear energy consumptions the quantile regression models used in the robustness check present that the effects are stronger for low level energy consumption economies

dynamic processes of social and economic interactions on the persistence of inefficiencies an economy with a finite number of agents and a finite number of states is considered an exogenous institutional rule prescribes which moves from one state to another are feasible to each coalition at each time an agent is called to act with some exogenous probability and he chooses a coalition a feasible new state to move the economy to and side payments between the agents in the coalition the setup can be applied to various dynamic processes of social and economic interactions such as legislative bargaining coalition formation or exchange economies whenever agents are unable to write long term contracts but are otherwise unconstrained both in their ability to write arbitrary spot contracts and in their ability to collude there can be long run inefficiencies with cycles or inefficient steady states however when agents are sufficiently patient the initial state from which the process starts plays no role in the long run moreover when there exists an efficient state that is free of negat

meaning and credibility in cheap talk games i define neologism proofness a refinement of perfect bayesian equilibrium in cheap talk games it applies when players have a preexisting common language so that an unexpected message s literal meaning is clear and only credibility restricts communication i show that certain implausible equilibria are not neologism proof in some games no equilibrium is journal of economic literature classification numbers d83 d82 c73

modeling climate feedbacks to electricity demand the case of china this paper is an empirical investigation of the effects of climate on the use of electricity by consumers and producers in urban and rural areas within china it takes advantage of an unusual combination of temporal and regional data sets in order to estimate temperature as well as price and income elasticities of electricity demand the estimated positive temperature electric power feedback implies a continually increasing use of energy to produce electric power which in china is primarily based on coal in the absence of countervailing measures this will contribute to increased emissions increased atmospheric concentrations of greenhouse gases and increases in greenhouse warming

do binding agreements solve the social dilemma we investigate whether binding agreements can provide a solution to the social dilemma that arises in the presence of pure public goods by signing a binding agreement players can prevent free riding by the contributors to a public good however a well known theoretical result is that the outcome of the endogenous formation of agreements is not necessarily efficient in our setting the individual level of contribution to the public good increases with the size of the coalition reaching an agreement and the global coalition is always the socially optimal structure agreements form sequentially and the equilibrium outcome is an asymmetric structure which consists of two coalitions our experiment therefore lends force to the theoretical result that outcomes may be inefficient in fact we observe an outcome which is even less efficient than that predicted by the equilibrium agreement structure however it seems that when subjects reach agreements they do so with the intention of cooperating rather than free riding furthermore it seems that they learn to cooperate over time and reach the global agreement more often towards the end of sessions keywords

optimal acquisition and remanufacturing policies for multi product remanufacturing systems abstract this paper studies an acquisition and remanufacturing problem in a market driven multi product remanufacturing system where the remanufacturer acquires multiple used products cores of highly variable quality under independently uncertain demand and carbon emissions regulation in order to balance between the environmental and economic benefit the problem is formulated as a nonlinear programming model in presence of the quality variability of cores and carbon tax scheme subject to budget and risk constraints since the average cost of the remanufactured products is independent of the remanufacturing quantity the model is then decomposed into two separated sub problems namely the remanufacturing problem and the acquisition problem in the remanufacturing problem the optimal remanufacturing policies including the optimal remanufacturing cost thresholds and the optimal remanufacturing rate are derived in the acquisition problem the optimal policies of core portfolio acquisition quantities and remanufacturing quantities can be derived the acquisition problem viewed as an extended multi product newsvendor problem mpnp is a convex optimization problem furthermore a two tier bisection method with polynomial computational complexity can be developed to obtain the optimal policies based on the karush kuhn tucker kkt conditions finally numerical experiments are provided to show the application of the model and the effect of the quality variability

stock rationing under service level constraints in a vertically integrated distribution system this paper addresses a rationing problem in a two level vertically integrated distribution system composed of one manufacturer and several retail points the motivating case developed in the vending machine sector and modeled as a newsvendor like problem is representative of many real settings where short term changes in demand can be substantial while capacity modification is not a viable option the paper provides an analytical discussion of the problem from two different standpoints a pure profit maximization perspective and a minimum service level perspective both subject to a product availability constraint that affects the service level the company can provide and the related expected profit by analyzing the lagrangean formulation of the problem we devise efficient computational procedures based on dichotomy search to find the optimal allotments to retailers maximizing the expected profit and ensuring a minimum service level then we extend the analysis to the evaluation of the highest service level that can be provided under a product availability constraint we identify conditions such that the proposed search procedures succeed in finding the optimal solutions as well as bounds for the search domains the proposed approach is legitimated under several demand distribution functions subject to a few commonly adopted restrictions that encompass many of the usually adopted continuous distributions finally the paper presents a three step decision making framework using the proposed procedures summarizing the decision paths the manufacturer might follow in order to optimize the allocation decision

a theory of endogenous coalition structures consider an environment with widespread externalities and suppose that bind ing agreements can be written we study coalition formation in such a setting our analysis proceeds by defining on a partition function an extensive form bargaining game we establish the existence of a stationary subgame perfect equilibrium for such a game our main results are concerned with the characterization of equilib rium coalition structures we develop an algorithm that generates under certain conditions an equilibrium coalition structure our characterization results are especially sharp for symmetric partition functions in particular we provide a uniqueness theorem and apply our results to a cournot oligopoly journal of economic literature classification numbers c71 c72 c78 d62 q 1999 academic press

a model of endogenous government formation political parties bargain over the allocation of cabinet portfolios when forming coalition governments noncooperative theories of legislative bargaining typically predict that the formateur enjoys a disproportionate share of government ministry positions however empirical evidence indicates that parties receive shares of portfolios proportional to their share of legislative seats that a government party contributes to the government coalition in support of gamson s law of portfolio allocation this article examines government formation as a process in which both the government coalition and the formateur are determined endogenously in equilibrium if parties have similar preferences over cabinet portfolios the share of seats they are allocated is proportional to the parties sizes

multi item quick response system with budget constraint quick response mechanisms based on effective use of up to date demand information help retailers to reduce their inventory management costs we formulate a single period inventory model for multiple products with dependent multivariate normal demand distributions and a given overall procurement budget after placing orders based on an initial demand forecast new market information is gathered and demand forecast is updated using this more accurate second forecast the retailer decides the total stocking level for the selling season the second order is based on an improved demand forecast but it also involves a higher unit supply cost to determine the optimal ordering policy we use a computational procedure that entails solving capacitated multi item newsboy problems embedded within a dynamic programming model various numerical examples illustrate the effects of demand variability and financial constraint on the optimal policy it is found that existence of a budget constraint may lead to an increase in the initial order size it is also observed that as the budget available decreases the products with more predictable demand make up a larger share of the procurement expenditure

the strategy structure of some coalition formation games in coalitional games with side payments the core predicts which coalitions form and how benefits are shared the predictions however run into difficulties if the core is empty or if some coalitions benefit from not blocking truthfully these difficulties are analyzed in games in which an a priori given collection of coalitions can form as the collection of pairs of buyer seller in an assignment game the incentive properties of the core and of its selections are investigated in function of the collection furthermore the relationships with vickrey clarke groves mechanisms are drawn

farsighted coalitional stability abstract i define the largest consistent set a solution concept which applies to situations in which coalitions freely form but cannot make binding contracts act publicly and are fully farsighted in that a coalition considers the possibility that once it acts another coalition might react a third coalition might in turn react and so on without limit i establish weak nonemptiness conditions and apply it to strategic and coalitional form games and majority rule voting i argue that it improves on the von neumann morgenstern stable set as it is usually defined but is consistent with a generalization of the stable set as in the theory of social situations journal of economic literature classification numbers c70 c71

political selection and persistence of bad governments we study dynamic selection of governments under different political institutions with a special focus on institutional flexibility a government consists of a subset of the individuals in the society the competence level of the government in office determines collective utilities e g by determining the amount and quality of public goods and each individual derives additional utility from being part of the government e g rents from holding office we characterize the dynamic evolution of governments and determine the structure of stable governments which arise and persist in equilibrium in our model perfect democracy where current members of the government do not have veto power over changes in governments always leads to the emergence of the most competent government however any deviation from perfect democracy to any regime with incumbency veto power destroys this result there is always at least one other less competent government that is also stable and can persist forever and even the least competent government can persist forever in office we also show that there is a nonmonotonic relationship between the degree of incumbency veto power and the quality of government in contrast in the presence of stochastic shocks or changes in the environment a regime with less incumbency veto power has greater flexibility and greater probability that high competence governments will come to power this result suggests that a particular advantage of democratic regimes with a limited number of veto players may be their greater adaptability to changes rather than their performance under given conditions finally we show that royalty like dictatorships may be more successful than junta like dictatorships because in these regimes veto players are less afraid of change

heating technology and energy use a discrete continuous choice approach to norwegian household energy demand abstract the aim of this paper is to describe the structure of the household s energy demand as a discrete continuous choice and on this basis establish an econometric model suitable for the data available in the norwegian energy surveys the discrete appliance choice is specified as a multinomial logit model with a mixture of appliance attributes operating costs and individual characteristics income housing unit characteristics etc as explanatory variables in the next step the continuous choice of energy use is modelled conditional on the appliance choice the energy prices turn out to be significant both when estimating the appliance choice and the conditional energy demand the estimated price elasticity for energy exceeds minus unity the paper discusses how this relatively strong price response should be interpreted in the context of other econometric analysis with no explicit appliance dependence finally the significance of the many household characteristics at both stages of the model signals a high degree of heterogeneity within the households which justifies the use of detailed micro data in the modelling of the energy demand

farsighted stability in patent licensing an abstract game approach abstract this paper analyzes the negotiations made by an external patent holder and potential licensee firms in a new model of patent licensing assuming that they are all farsighted and characterizes the symmetric farsighted stable sets given a net profit of each licensee firm a set of outcomes is a symmetric farsighted stable set if and only if at any outcome in the set each licensee firm receives the net profit and the number of licensee firms maximizes the patent holder s profit provided that licensee firms obtain the net profits we also show the close relationship between the symmetric farsighted stable sets and the relative interior of the core further we confirm that the symmetric farsighted stable sets are the absolutely maximal farsighted stable sets ray and vohra forthcoming as well as the history dependent strongly rational expectation farsighted stable sets dutta and vartiainen forthcoming

mistakes in cooperation the stochastic stability of edgeworth s recontracting in an exchange economywith a finite number of indivisible goods we analyze a dynamic trading process of coalitional recontracting where agents may make mistakes with small probability we show first that the recurrent classes of the unperturbed mistake free process consist of i all core allocations as absorbing states and ii cycles of non core allocations next we introduce a perturbed process where the resistance of each transition is a function of the number of agents that make mistakes do not improve in the transition and of the seriousness of each mistake if preferences are always strict we show that the unique stochasticallystable state of the perturbed process is the walrasian allocation in economies with indifferences non core cycles are sometimes stochastically stable while some core allocations are not

allocating value among farsighted players in network formation we study the stability of networks when players are farsighted and allocations are determined endogenously the set of strongly efficient networks is the unique von neumann morgenstern farsightedly stable set with bargaining if the value function is anonymous component additive and top convex and the allocation rule is anonymous and component efficient moreover the componentwise egalitarian allocation rule emerges endogenously

joint production and pricing decisions for multiple products with cap and trade and carbon tax regulations abstract cap and trade and carbon tax regulations are the two main low carbon policies to curb carbon emissions this paper studies the joint production and pricing problem of a manufacturing firm with multiple products under cap and trade and carbon tax regulations and compares the effects of the two regulations on the total carbon emissions the firm s profit and social welfare the firm faces price sensitive demands and the demands for these products are independent firstly we find that the optimal number of products to be produced under cap and trade regulation carbon tax regulation is determined by the emission trading prices and the cap tax rate secondly we detect that the optimal cap tax rate is decreasing increasing or constant in the environmental damage coefficient finally we discover that the social welfare under carbon tax regulation is not less than that under cap and trade regulation although there is neither one regulation always inducing more profit and having advantages in curbing carbon emissions than the other one

voting for voters a model of electoral evolution we model the decision problems faced by the members of societies whose new members are determined by vote we adopt a number of simplifying assumptions the founders and the candidates are fixed the society operates for k periods and holds elections at the beginning of each period one vote is sufficient for admission and voters can support as many candidates as they wish voters assess the value of the streams of agents with whom they share the society while they belong to it in spite of these simplifications we show that interesting strategic behavior is implied by the dynamic structure of the problem the vote for friends may be postponed and it may be advantageous to vote for enemies we discuss the existence of different types of equilibria in pure strategies and point out interesting equilibria in mixed strategies

equilibrium binding agreements abstract we study equilibrium binding agreements the coalition structures that form under such agreements and the efficiency of the outcomes that result we analyze such agreements in a context where the payoff to each player depends on the actions of all other players thus a game in strategic form is a natural starting point unlike the device of a characteristic function explicit attention is paid to the behavior of the complementary set of players when a coalition blocks a proposed agreement a solution concept and its applications are discussed journal of economic literature classification numbers c70 c71

how will energy demand develop in the developing world most of the medium run growth in energy demand is forecast to come from the developing world which consumed more total units of energy than the developed world in 2007 we argue that the main driver of the growth is likely to be increased incomes among the poor and near poor we document that as households come out of poverty and join the middle class they acquire appliances such as refrigerators and vehicles for the first time these new goods require energy to use and energy to manufacture the current forecasts for energy demand in the developing world may be understated because they do not accurately capture the dramatic increase in demand associated with poverty reduction

note note on optimal ordering quantity to realize a pre determined level of profit in this note we consider the one period inventory model in which it is required to determine the order quantity which maximizes the probability of realizing a predetermined level of profit r we give a condition for determining the optimal order quantity and provide explicit expressions for the optimal order quantity in three special cases

climate change adaptation a study of fuel choice and consumption in the us energy sector abstract using cross sectional data this paper estimates a national energy model of fuel choice by both households and firms consumers in warmer locations rely relatively more heavily on electricity rather than natural gas oil and other fuels they also use more energy climate change will likely increase electricity consumption on cooling but reduce the use of other fuels for heating on net american energy expenditures will likely increase resulting in welfare damages that increase as temperatures rise for example if the us warms by 5 c by 2100 we predict annual welfare losses of 57 billion

a model of agreements in strategic form games abstract because in a strategic form game all the possibilities of communication available to the players must be explicitly listed in the strategy spaces coalitions and coalitional behaviour are not very often taken into account in noncooperative games however it may be desirable especially in applications to separate the basic strategic features of a situation from those strategic features added as a consequence of the possibility of coalitional behaviour we define an equilibrium for the bargaining procedure called by greenberg the theory of solid situations an alternative game theoretic approach cambridge university press cambridge uk 1990 coalitional contingent threat situation we argue that the crucial problem of expectations on the counterdeviations following a deviation can be addressed by defining coalitional strategies and studying the equilibrium of the extended game journal of economic literatureclassification numbers c70 c71

rationalizable strategic behavior the notion of equilibrium proposed by nash 19 has come to play a dominant role in economic applications of noncooperative games while analyses of nash equilibria have unquestionably contributed to our understanding of economic behavior it would be unreasonably optimistic to maintain that nash solved the problem of noncooperative strategic choice there is a small literature beginning with ellsberg 6 and a much larger oral tradition which argues that nash behavior is neither a necessary consequence of rationality nor a reasonable empirical proposition in this paper i take the view that although there may be various reasons why an agent might select a nash strategy the notion of an equilibrium has little intrinsic appeal within a strategic context when an agent reaches a decision in ignorance of the strategies adopted by other players rationality consists of making a choice which is justifiable by an internally consistent system of beliefs rather than one which is optimal post hoc this point of view is not original indeed most serious justifications of the nash hypothesis embrace such an approach arguing that agents will expect the game to yield a nash outcome and consequently will choose their equilibrium strategies nevertheless when we think in terms of maximizing utility subject to expectations rather than realizations it becomes clear that the nash hypothesis far from being a consequence of rationality arises from certain restrictions on agents expectations which may or may not be plausible depending upon the game being played we are then quite naturally led to ask are there any restrictions of individuals expectations and hence choices which are required by rationality alone rather than by subjective plausibility this paper is concerned with defining justifying characterizing and refining a criterion for rational strategic choice which i label rationalizability

stable sets for exchange economies with interdependent preferences abstract we introduce the notion of stable sets with externalities and prove its existence stable sets provide a successful alternative to core notions of externalities i e core core and strong nash equilibrium which are typically empty however the stable sets do exist in situations where the above core notions are empty

limited farsightedness in network formation pairwise stability jackson and wolinsky 1996 is the standard stability concept in network formation it assumes myopic behavior of the agents in the sense that they do not forecast how others might react to their actions assuming that agents are perfectly farsighted related stability concepts have been proposed we design a simple network formation experiment to test these extreme theories but find evidence against both of them the subjects are consistent with an intermediate rule of behavior which we interpret as a form of limited farsightedness on aggregate the selection among multiple pairwise stable networks and the performance of farsighted stability crucially depends on the level of farsightedness needed to sustain them and not on efficiency or cooperative considerations individual behavior analysis corroborates this interpretation and suggests in general a low level of farsightedness around two steps on the part of the agents

experimental evidence on the evolution of the meaning of messages in sender receiver games an experiment this paper experimentally investigates the evolution of message meanings when talk is cheap we consider communication between a privately informed sender and a receiver when the sender s message does not affect payoffs directly sender receiver games introduced by jerry green and nancy stokey 1980 and vincent p crawford and joel sobel 1982 provide the simplest stylized environment in which communication is essential communication is the only way to link the receiver s action to the sender s private information in addition sender receiver games have been widely used to study communication in accounting economics finance and political science intuition strongly suggests that effective communication will evolve when the players interests are closely aligned however there is always a nash equilibrium in which the sender randomizes uniformly across all messages such babbling equilibria are proper roger b myerson 1978 blume 1994 and even strategic stability elon kohlberg and jeanfrancois mertens 1986 does not rule out uninformative equilibria in general in response a literature developed that formulates equilibrium selection criteria by appealing to the existence of a commonly understood language matthew rabin 1990 steven a matthews et al 1991 joseph farrell 1993 that can be used to formulate credible deviations from equilibrium unfortunately the selection criteria from this literature are frequently strong enough to remove all equilibria from consideration in addition these arguments are vulnerable to stiglitz s observation in koo cho and david m kreps 1987 that successful deviations from equilibrium may induce further deviations which in turn may undermine the credibility of the original deviations both problems can be avoided by a dynamic approach as in rabin and sobel 1996 we also adopt a dynamic perspective but do not require messages to have a priori meanings instead distinct meanings may emerge endogenously this is important for communication across cultures and for language change 2 we are guided by recent results of blume department of economics university of iowa iowa city ia 52242 dejong department of accounting university of iowa iowa city ia 52242 kim department of economics sung kyun kwan university seoul 110 745 korea sprinkle department of accounting university of wisconsin madison wi 53706 we thank joyce berg vince crawford robert forsythe joel horowitz deirdre mccloskey forrest nelson larry samuelson gene savin joel sobel and especially two anonymous referees for their advice and suggestions we benefitted from comments and discussions resulting from presentations at the 1994 summer meetings of the econometric society the 1996 social learning workshop at suny stony brook the io me gt workshop at the university of iowa the university of bonn the university of bielefeld the center for economic research at tilburg university ohio state university seoul national university and texas a m university we are grateful for financial support from the college of business administration at the university of iowa the ira b mcgladrey institute and the national science foundation

an efficient algorithm for capacitated assortment planning with stochastic demand and substitution abstract the ever increasing product variety in grocery retailing is in conflict with the limited shelf space managing the assortment and regular order quantity for perishable and non perishable products is therefore a core task for retailers retailers want to maximize profit by considering potential revenues purchase costs diminishing profits for products and opportunity costs for unfulfilled demand when determining assortment sizes and order volume to meet stochastic consumer demand we considered a newsvendor based decision model that jointly optimizes assortment size and the associated order volumes for listed items the model considers out of assortment ooa and out of stock oos substitution effects the model is a structural equivalent to the model described in kok and fisher 2007 and solved there via a heuristic procedure we develop an optimal solution procedure and a time efficient heuristic that solves the model the heuristic suggested is applicable for practically relevant large scale problem instances numerical tests reveal that the heuristic procedure produces close to optimal solutions and outperforms the kok and fisher heuristic with regard to both computational time and solution quality a simulation study with discrete demand justifies our approach with using continuous demand distributions the numerical analyses show that considering substitution effects in a decision based model has a significant impact on the total profit and solution structure further managerial insights are presented with regard to assortment heterogeneity when shelf size substitution and demand variability are varied

farsightedness changing stock location and the stability of international fisheries agreements changes in stock location may affect the stability of international fisheries agreements this paper offers a theoretical analysis of the stability of regional fisheries management organisations rfmos in a non cooperative coalition formation game based on the classic gordon schaefer model we employ a new stability concept which modifies farsighted stability chwe j econ theory 63 299 325 1994 we call this concept farsighted downwards stability fds we also employ the internal stability is concept for comparison analytical results regarding fds for symmetric players without changing stock location show stable grand coalitions for n le 4 player games and the possibility for partial cooperation sensitivity analysis deals with changing stock location and cost asymmetry stability decreases in n increases when costs are asymmetric and increases when fds is employed farsighted conjectures on behalf of rfmo members can thus help to maintain cooperation as stock location changes however fds is more sensitive to changes in stock location than is

rationalizable strategic behavior and the problem of perfection this paper explores the fundamental problem of what can be inferred about the outcome of a noncooperative game from the rationality of the players and from the information they possess the answer is summarized in a solution concept called rationalizability strategy profiles that are rationalizable are not always nash equilibria conversely the information in an extensive form game often allows certain unreasonable nash equilibria to be excluded from the set of rationalizable profiles a stronger form of rationalizability is appropriate if players are known to be not merely rational but also cautious what constitutes rational behavior in a noncooperative strategic situation this paper explores the issue in the context of a wide class of finite noncooperative games in extensive form the traditional answer relies heavily upon the idea of nash equilibrium nash 17 the position developed here however is that as a criterion for judging a profile of strategies to be reasonable choices for players in a game the nash equilibrium property is neither necessary nor sufficient some nash equilibria are intuitively unreasonable and not all reasonable strategy profiles are nash equilibria the fact that a nash equilibrium can be intuitively unattractive is well known the equilibrium may be imperfect introduced into the literature by selten 20 the idea of imperfect equilibria has prompted game theorists to search for a narrower definition of equilibrium while this research some of which will be discussed here has been extremely instructive it remains inconclusive theorists often agree about what should happen in particular games but to capture this intuition in a general solution concept has proved to be very difficult if this paper is successful it should make some progress in that direction the other side of the coin has received less scrutiny can all non nash profiles really be excluded on logical grounds i believe not the standard justifications for considering only nash profiles are circular in nature or make gratuitous assumptions about players decision criteria or beliefs the following discussion of these points is extremely brief due to space constraints more detailed arguments may be found in pearce 18

optimal ordering quantities for multi products with stochastic demand return cvar model abstract multi product ordering problem with stochastic demand is often optimized by the expected cost reduction or the expected profit improvement in most of previous works moreover risk preference of decision maker is often ignored evidently this approach is impracticable when the corresponding volatility is larger based on the outstanding characteristics of conditional value at risk cvar as a risk measure the paper proposes an optimal order model for multi product with cvar constraints also the model is finally formulated as a linear programming problem the model is simulated for the case of a newsvendor to analyze to what degree it succeeds the solution in fact is bound consistent fully with the decision maker s intuition on return risk decision making finally results of return cvar model and the classical model are compared and shows that return cvar model is more flexible than the classical model

modeling household energy expenditure in the united states abstract energy consumption is one of the main source of air pollution greenhouse gas emission and global warming reducing household energy consumption is a key goal of policymakers we develop statistical models using socio economics and demographics building characteristics location temperature and energy prices to estimate household energy expenditure in the u s we use household energy expenditure for more than 560 000 households in the u s from 2010 to 2012 we first employ multivariate regression models to investigate and identify the impacts of the explanatory variables on household energy expenditure next we use principal component analysis pca to convert correlated co linear explanatory variables into orthogonal components and estimate household energy expenditure by principal component regression we find newer attached buildings to be effective in decreasing household energy expenditure particularly among educated people in metropolitan areas with sufficient data availability our model could be used by state regional or even city level policymakers and planners to optimize their infrastructural investments

coalition formation as a dynamic process abstract we study coalition formation as an ongoing dynamic process with payoffs generated as coalitions form disintegrate or regroup a process of coalition formation pcf is an equilibrium if a coalitional move to some other state can be justified by the expectation of higher future value compared to inaction this future value in turn is endogenous it depends on coalitional movements at each node we study existence of equilibrium pcfs we connect deterministic equilibrium pcfs with unique absorbing state to the core and equilibrium pcfs with multiple absorbing states to the largest consistent set in addition we study cyclical as well as stochastic equilibrium pcfs

effects of constrained supply and price contracts on agricultural cooperatives planning strategies depend in part on the supply flow structure of a supply chain in food supply chains many firms are constrained by raw material supply e g vegetables and milk this paper first examines the economic consequences of constrained supply in agricultural cooperatives secondly it deals with the effects of adding price contracts to the current cooperative contract this model combines an inventory policy approach and a monte carlo simulation to take into account price uncertainty we illustrate our results using the case of a dairy cooperative c 2008 elsevier b v all rights reserved

deviations dynamics and equilibrium refinements existing equilibrium refinements rule out nash equilibria susceptible to deviations we propose a framework for considering not only equilibria impervious to deviations but also equilibria likely to recur in the long run because they are repeatedly deviated to we explore which equilibria are recurrent with respect to the deviations underlying some existing signaling refinements we show that the set of recurrent equilibria based on cho and kreps s 1987 intuitive criterion is equivalent to their solution concept but that applying our framework to existing cheap talk refinements make those solution concepts more realistic and guarantee existence where their current formulations do not journal of economic literatureclassification numbers b49 c72 c73

the capacitated newsboy problem with random yield the gardener problem abstract this publication is the third in a series of articles by abdel malek et al 2004 exact approximate and generic iterative models for the multi product newsboy with budget constraint international journal of production economics 91 189 198 and abdel malek and montanari 2005 an analysis of multi product newsboy problem with a budget constraint international journal of production economics 97 296 307 which appeared in ijpe addressing issues regarding the newsboy models in this paper models are developed to extend the existing ones to cover random yield scenarios we designate this type of models as the gardener problem the models are based on the application of lagrange multipliers leibniz s rule and newton s method to obtain the optimum solution for the considered random yield and probabilistic demand situations the developed methodologies are applicable to general probability distribution functions examples are given to show the applicability of the developed approach to different probability distributions for both the supply and the demand as well as for interdependent yield structures

conflict leads to cooperation in demand bargaining abstract we consider a multilateral nash demand game in which short sighted players come to the bargaining table with requests for both coalition partners and the potentially generated resource we prove that the resulting process converges with probability one to a state in which all players agree on a strictly self enforcing division of resources i e a strict core allocation highlighting group dynamics we show how the myopic actions of players may lead to the break up of groups in the short run but can ultimately bring about a situation from which a strictly self enforcing allocation can be reached

managing product variety with advance selling and capacity restrictions abstract in this research we analyze the impact of advance selling with price discount on a firms ability to maximize the expected profit the production environment of the firm is characterized by short selling cycle multiple products demand variability and capacity restrictions the advance orders are randomly distributed with the parameters dependent on the discount levels under advance selling the advance orders are used to update the demand forecast of selling season and are delivered at the start of the selling season the problem is modeled as a three stage stochastic non linear programming problem we derive the concavity of the problem under customers willingness to buy in advance our solution methodology comprises the variance reduction technique of antithetic variates that gives credible value of price discount levels for different sets of demand values we also provide sensitivity analysis of the problem parameters to derive insights into the behavior of the expected profit and the benefits due to advance selling under capacity restrictions

the newsstand problem a capacitated multiple product single period inventory problem abstract practically all of the many earlier papers on the newsboy problem consider a single newsboy product with no capacity constraint this paper presents formulations and solution procedures for handling multiple newsboy type products under two cases a one resource capacity constraint and b multiple resource constraints for case a we present a necessary extension to the classical hadley whitin result for handling general demand distributions for case b we present a solution procedure that can efficiently handle the common situation where a very large number of products are involved

stable farsighted coalitions in competitive markets in this paper we study dynamic alliance formation among agents in competitive markets we look at n agents selling substitutable products competing in a market in this setting we examine models with deterministic and stochastic demand and we use a two stage approach in stage 1 agents form alliances coalitions and in stage 2 coalitions make decisions price and inventory and compete against one another to analyze the stability of coalition structures in stage 1 we use two notions from cooperative games the largest consistent set lcs and the equilibrium process of coalition formation epcf which allow players to be farsighted thus in forming alliances players consider two key phenomena first players trade off the size of the total profit of the system versus their allocation of this total pie and second they weigh the possibility that an immediate beneficial defection can trigger further counter defections that in the end may prove to be worse than the status quo in particular one such example is that of the grand coalition which we show to be stable in the farsighted sense even though players benefit myopically by defecting from it we also provide conditions under which a situation of a few lone players competing against a large coalition is stable we examine the impact of the size of the market n the degree of competition the effect of cost parameters and the variability of the demand process on the prices inventory levels and structure of the market we discuss the possible strategic implications of our results to firms in a competitive market and for new entrants

inventory control with an exponential utility criterion a base stock policy is shown to be optimal when a dynamic version of the news vendor model is optimized with respect to an exponential utility criterion

farsightedness in a coalitional great fish war we explore the implications of the farsightedness assumption on the conjectures of players in a coalitional great fish war model with symmetric players derived from the seminal model of levhari and mirman bell j econ 11 649 661 1980 the farsightedness assumption for players in a coalitional game acknowledges the fact that a deviation from a single player will lead to the formation of a new coalition structure as the result of possibly successive moves of her rivals in order to improve their payoffs it departs from mainstream game theory in that it relies on the so called rational conjectures as opposed to the traditional nash conjectures formed by players on the behavior of their rivals for values of the biological parameter and the discount factor more plausible than the ones used in the current literature the farsightedness assumption predicts a wide scope for cooperation in non trivial coalitions sustained by credible threats of successive deviations that defeat the shortsighted payoff of any prospective deviator compliance or deterrence of deviations may also be addressed by acknowledging that information on the fish stock or on the catch policies actually implemented may be available only with a delay dynamic farsightedness in that case the requirements are stronger and the sizes and number of possible farsighted stable coalitions are different in the sequential move version which could mimic some characteristics of fishery models the results are not less appealing even if the dominant player or dominant coalition with first move advantage assumption provides a case for cooperation with the traditional nash conjectures

residential energy demand in the united states analysis using static and dynamic approaches abstract the residential sector is the main consumer of energy in the united states and reducing energy consumption is an important goal for policymakers in each state to know how reducing residential energy demand could be achieved this study develops a set of static and dynamic models to investigate and identify the impact of socio economic and demographic characteristics building age energy prices and weather conditions on residential energy demand at the state level from 2005 to 2013 next this study proposes two alternative scenarios to reduce residential energy demand based on the most precise model for every 10 000 dollars of per capita income in each state 1 increasing residential electricity price by 1 cent per kw h and 2 decreasing average building age by 1 in the first scenario the findings indicate that annual residential electricity demand would decrease by 7 3 on average with the highest reductions in washington 11 9 north dakota 10 9 and idaho 9 7 in the second scenario residential gas demand would decrease by an average of 15 8 annually with the highest reduction in connecticut 33 2 followed by new york 33 0 and massachusetts 30 7 these proposed scenarios assist policymakers in optimizing decisions and investments to reduce residential energy consumption

unimprovable allocations in economies with incomplete information abstract the paper considers an exchange economy with incomplete information in which agents can retrade goods until all gains from trade are exhausted unimprovable allocations are defined to be those allocations from which agents would not wish to deviate either by retrading goods or by revealing further information the concept of unimprovability is then used to analyze a lemons market and an adverse selection insurance market in which agents can renegotiate after information has been revealed finally unimprovability is compared to different concepts of efficiency and to the concept of durability journal of economic literature classification number d82

vertical integration with endogenous contract leadership stability and fair profit allocation abstract this paper studies vertical integration in serial supply chains with a wholesale price contract we consider a business environment where the contracting leader may be endogenously changed before and after forming the integration a cooperative game is formulated to normatively analyze the stable and fair profit allocations under the grand coalition in such an environment our main result demonstrates that vertical integration is stable when all members are pessimistic in the sense that they are sure that they will not become the contracting leader if they deviate from the grand coalition we find that in this case the grand coalition s profit must be allocated more to the retailer and the members with higher costs nevertheless we also show the conditions under which the upstream manufacturer can have strong power as in traditional supply chains

formation of alliances in internet based supply exchanges in different industries such as automobiles chemicals or retailing competitors are joining forces in establishing electronic marketplaces to reduce inefficiencies in the purchasing process and cut costs by combining their buying power joining such an alliance leads to reduced costs including those of possible rivals because members share the development and operating costs a company that joins an alliance agrees to share its suppliers with others which may lead to more intense competition among the increased number of suppliers and it may further benefit an alliance member at the expense of companies left outside the alliance natural questions that could arise then are when would a firm prefer to take part in an electronic marketplace joint venture when would it prefer that other firms possibly rivals join the venture and what are the financial consequences of either joining an alliance or remaining independent in an attempt to gain a better understanding of the issues we have developed a model of three retailers whose products may have a certain degree of substitutability we provide some conditions in terms of product substitutability and compatibility of retailers that would lead to the formation of a three member alliance or a two member alliance or no alliance at all we also study the effect of alliance structure and compatibility of retailers on the profit of a company

equilibrium selection in experimental cheap talk games in the past many refinements have been proposed to select equilibria in cheap talk games usually these refinements were motivated by a discussion of how rational agents would reason in some particular cheap talk games in this paper we propose a new refinement and stability measure that is intended to predict actual behavior in a wide range of cheap talk games according to our average credible deviation criterion acdc the stability of an equilibrium is determined by the frequency and size of credible deviations acdc organizes the results from several cheap talk experiments in which behavior converges to equilibrium even in cases where other criteria do not make a prediction

a dynamic model of equilibrium selection in signaling markets in his work on signaling spence proposed a dynamic model of a market in which a buyer revises prices in light of experience and in which sellers with private information about their types choose utility maximizing signals given these prices we follow spence s suggestion of introducing perturbations into the resulting dynamic process in a broad class of markets our model selects a separating equilibrium outcome if and only if the equilibrium outcome satisfies a version of the undefeated equilibrium concept whereas a pooling equilibrium outcome is selected if and only if the equilibrium outcome is both undefeated and satisfiesd1

single period single product newsvendor model with random supply shock abstract in order to investigate the efficiency of policies made by the industrial administration office iao for short so as to keep market order the authors propose a shocked inventory model of one product with both genuine and counterfeit qualities the checking policies made by the iao are considered to be a random shock for the inventory model by examination of the qualities of the products which will expropriate the counterfeit products the paper makes two contributions first while discussing several conditions the authors provide a basic theory which is a kind of extension of the newsvendor problem and prove some properties of the optimal policies for the shocked inventory model with a fixed random checking rate second the authors give some recommendations as to how the iao can formulate its checking policies an example demonstrates the relationship between checking policies and optimal inventory policies

durable goods and long run electricity demand evidence from air conditioner purchase behavior i estimate a dynamic structural model of demand for air conditioners the most energy intensive home appliance in the us the model explores the links between demand for durable goods and expected changes in key attributes energy efficiency and price i incorporate expectations explicitly as a feature of the choice setting and use parameter estimates from the model to calculate durable good demand elasticities with respect to energy efficiency electricity price and price of the durable itself these estimates fill a large gap in the literature and also shed light on consumer behavior in this setting results indicate that consumers are forward looking and value the stream of future savings derived from energy efficiency

product variety arising from hedging in the fashion supply chains consider a well defined fashion apparel category where the variants are distinguished by style and colour and are subject to two equally likely states of the world state1 when some variants become popular and others unpopular and state2 when the reverse takes place we analyse the optimal portfolio and variety arising from hedging against uncertainty triggered by the states by integrating the markowitz and the newsboy models while carefully considering demand correlations we show that due to the complex structure of the uncertainty building hedging portfolios with competing items is necessary for optimality we also show how mis specifying the distributions can lead to very bad trade offs between risk and expected profit caused by a lack of proper hedging

aggregate constrained inventory systems with independent multi product demand control practices and theoretical limitations in practice inventory managers are often confronted with a need to consider one or more aggregate constraints these aggregate constraints result from available workspace workforce maximum investment or target service level we consider independent multi item inventory problems with aggregate constraints and one of the following characteristics deterministic leadtime demand newsvendor basestock policy rq policy and ss policy we analyze some recent relevant references and investigate the considered versions of the problem the proposed model formulations and the algorithmic approaches finally we highlight the limitations from a practical viewpoint for these models and point out some possible direction for future improvements

do investments in specialized knowledge lead to composite good industries we try to understand why firms producing goods by means of complementary components do not merge especially in industries in which investments in component based knowledge matters as audretsch we state that these activities are developed by individuals who do their best to appropriate the return from their knowledge and whose effort is non contractible the organization of the industry into firms is identified to a partition of the set of individuals in this context we prove that an organization in which each individual hold his own firms is both stable with respect to unilateral deviation and optimal in the line of the property right approach if the returns are high enough this structure is even the only one which shares both properties

a reputation refinement without equilibrium the economic literature concerning agents reputations has grown steadily since the seminal work of kreps milgrom roberts and wilson 2 early work focused on how incomplete information leads to equilibria that are vastly different but more intuitive than those possible in the complete information game recently however game theorists have been studying how incomplete information might refine the set of equilibria 3 one important class of games is that in which a single long run agent plays a simultaneous move stage game with a sequence of opponents each of whom plays only once yet observes all previous play fudenberg and levine 1989 study the reputation of the long run player in this type of game they argue that the most reasonable equilibrium is the one which the long run player most prefers their intuition is sustained when one perturbs the game with the stackelberg strategy fudenberg and levine show that in the perturbed game the equilibrium payoffs of the long run player are bounded below by a number that converges to the stackelberg payoff

correlated equilibria incomplete information and coalitional deviations this paper proposes new concepts of strong and coalition proof correlated equilibria where agents form coalitions at the interim stage and share information about their recommendations in a credible way when players deviate at the interim stage coalition proof correlated equilibria may fail to exist for two player games however coalition proof correlated equilibria always exist in dominance solvable games and in games with positive externalities and binary actions c 2008 elsevier inc all rights reserved

communication between rational agents abstract conventional game theoretic solution concepts never guarantee meaningful communication in cheap talk games i define a solution concept which does guarantee communication in some games i assume full rationality without imposing equilibrium conditions but add a natural behavioral assumption about how agents use language agents have a propensity to speak the truth and to believe others speak the truth but use the game s strategic incentives to check whether such behavior and beliefs are rational i also define and prove the existence of an equilibrium version of the concept and present examples where its predictions seem more natural than farrell s neologism proof equilibrium

the impact of climate conditions on economic production evidence from a global panel of regions abstract we present a novel data set of subnational economic output gross regional product grp for more than 1500 regions in 77 countries that allows us to empirically estimate historic climate impacts at different time scales employing annual panel models long difference regressions and cross sectional regressions we identify effects on productivity levels and productivity growth we do not find evidence for permanent growth rate impacts but we find robust evidence that temperature affects productivity levels considerably an increase in global mean surface temperature by about 3 5 c until the end of the century would reduce global output by 7 14 in 2100 with even higher damages in tropical and poor regions updating the dice damage function with our estimates suggests that the social cost of carbon from temperature induced productivity losses is on the order of 73 142 tco2 in 2020 rising to 92 181 tco2 in 2030 these numbers exclude non market damages and damages from extreme weather events or sea level rise

participation games and international environmental agreements a non parametric model abstract we examine the size of stable coalitions in a participation game that has been used to model international environmental agreements cartel formation rd based on these examples a consensus has emerged that in this kind of game the equilibrium coalition size is small except possibly when the potential benefits of cooperation are also small in this paper we develop a non parametric approach to the problem and demonstrate that the conventional wisdom is not robust in a general setting we identify conditions under which the equilibrium coalition size can be large even when potential gains are large contrary to previously examined leading special cases we show that reductions in marginal abatement costs in an international environmental game can increase equilibrium membership and we provide a measure of the smallest reduction in costs needed to support a coalition of arbitrary size

stationarity rationalizability and bargaining strategies for the seller and the buyer which are weakly stationary we demonstrate that any initial offer from the seller induced by a strategy rationalized by a weakly stationary acceptance rule for the buyer must entail the coase property our result does not presume the selection of a particular equilibrium and follows directly from the weak stationarity assumption of the buyer s acceptance rule and the rational behaviour of the players

the impact of climate change on the electricity market a review climate change will impact electricity markets through both electricity demand and supply this paper reviews the research on this topic whereas there is much that remains unknown or uncertain research over the last few years has significantly advanced our knowledge in general higher temperatures are expected to raise electricity demand for cooling decrease demand for heating and to reduce electricity production from thermal power plants the effect of climate change on the supply of electricity from non thermal sources shows great geographical variability due to differences in expected changes to temperature and precipitation whereas the research frontier has advanced significantly in the last few years there still remains a significant need for more research in order to better understand the effects of climate change on the electricity market four significant gaps in the current research are regional studies of demand side impacts for africa asia the caribbean and latin america the effects of extreme weather events on electricity generation transmission and demand changes to the adoption rate of air conditioning and finally our understanding of the sensitivity of thermal power supply to changes in air and water temperatures

dynamics and stability of constitutions coalitions and clubs a central feature of dynamic collective decision making is that the rules that govern the procedures for future decision making and the distribution of political power across players are determined by current decisions for example current constitutional change must take into account how the new constitution may pave the way for further changes in laws and regulations we develop a general framework for the analysis of this class of dynamic problems under relatively natural acyclicity assumptions we provide a complete characterization of dynamically stable states as functions of the initial state and determine conditions for their uniqueness we show how this framework can be applied in political economy coalition formation and the analysis of the dynamics of clubs the explicit characterization we provide highlights two intuitive features of dynamic collective decision making 1 a social arrangement is made stable by the instability of alternative arrangements that are preferred by sufficiently many members of the society 2 efficiency enhancing changes are often resisted because of further social changes that they will engender

impact of temperature on electricity demand evidence from delhi and indian states abstract electricity for cooling improves health and quality of life and is an important mode of adapting to extreme weather conditions and to climate change this study measures the change in electricity demand in response to weather shocks at the household level in delhi and at various aggregate levels in india our econometric analysis uses a semi parametric model to capture the nonlinearity of short run temperature response on average aggregate electricity demand in india increases by 11 or more at temperatures above 30 c from demand at temperatures of 21 24 c with substantial heterogeneity across states aggregate demand in delhi increases by 30 or more at temperatures above 30 c using rich micro data on electricity demand in delhi we do a first of its kind estimation of household level temperature response we find evidence that low income consumers especially those living in slums show limited incremental response to high temperatures likely due to an absence of cooling options these findings underscore the need to improve our understanding of the constraints posed by poverty on climate change adaptation and for interventions to mitigate risks of heat stress among the poor this also suggests rising affluence will lead to sharp increases in electricity demand for cooling

participation and duration of environmental agreements we analyze participation in international environmental agreements in a dynamic game in which countries pollute and invest in green technologies if complete contracts are feasible participants eliminate the holdup problem associated with their investments however most countries prefer to free ride rather than participate if investments are noncontractible countries face a holdup problem every time they negotiate but the free rider problem can be mitigated and significant participation is feasible participation becomes attractive because only large coalitions commit to long term agreements that circumvent the holdup problem under well specified conditions even the first best outcome is possible when the contract is incomplete

coalition bargaining in repeated games we consider an intertemporal game theoretic framework in which different coalitions interact repeatedly over time both the terms of trade and the endogenous cooperation structure arising in this setup are characterized in a protocol free manner provided that just three natural conditions on the outcome are satisfied c1 a coalition is formed with positive probability if and only if the shares obtained in this case by its members weakly exceed their respective share expectations c2 each matched coalition distributes the entire surplus among its members c3 members of any coalition are treated symmetrically with respect to their share expectations when the surplus of this coalition is distributed our analysis primarily focuses on the limit scenario where the game ends each date with vanishing probability we show that in this case the cooperation structure and the shares are unique in an application to trade networks we show that in a complete network a unique price arises and agents specialize in either buying or selling in an incomplete network on the other hand transactions occur generally at multiple prices and some agents become arbitrageurs that buy and sell at different prices

electricity demand elasticities and temperature evidence from panel smooth transition regression with instrumental variable approach abstract this study applies a non linear model i e the recently developed panel smooth transition regression pstr model and takes into account the potential endogeneity biases to investigate the demand function of electricity for 24 oecd countries from the period 1978 2004 our empirical results demonstrate that there is a strongly non linear link among electricity consumption real income electricity price and temperature a result that is new to the literature as real income rises electricity consumption rapidly increases first and after the level of real income exceeds approximately us 2500 its increasing rate turns slow down an increase in electricity price has a negative or no influence on electricity consumption evidence of a u shaped relationship between electricity consumption and temperature is supported and the threshold value of temperature is approximately 53 f which is endogenously determined furthermore the estimated elasticities of time dynamic indicate that electricity demand is income inelastic price inelastic and temperature inelastic as time goes on the absolute elasticities of electricity demand gradually decrease with respect to real gdp and electricity price whereas they gradually increase with respect to temperature suggesting that the impact of temperature on electricity demand is becoming more important in recent years

stable coalition structures with externalities this paper argues that the sign of external effects of coalition formation provides a useful organizing principle in examining economic coalitions in many interesting economic games coalition formation creates either negatie externalities or posi tie externalities for nonmembers examples of negative externalities are research coalitions and customs unions examples of positive externalities include output cartels and public goods coalitions i characterize and compare stable coalition structures under the following three rules of coalition formation the open