sequential formation of coalitions in games with externalities and fixed payoff division this paper analyzes a sequential game of coalition formation when the division of the coalitional surplus is fixed and the payoffs are defined relative to the whole coalition structure gains from cooperation are represented by a valuation which maps coalition structures into payoff vectors i show that any core stable coalition structure can be attained as a stationary perfect equilibrium of the game if stationary perfect equilibria may fail to exist in general games a simple condition is provided under which they exist in symmetric games furthermore symmetric stationary perfect equilibria of symmetric games generate a coalition structure which is generically unique up to a permutation of the players a general method for the characterization of equilibria in symmetric games is proposed and applied to the formation of cartels in oligopolies and coalitions in symmetric majority games journal of economic literatureclassification numbers c78 c71 1996 academic press inc

dynamic group formation in the repeated prisonerʼs dilemma abstract we consider dynamic group formation in repeated n person prisoner s dilemma agreements in coalitional bargaining are self binding in that they are supported as subgame perfect equilibria of repeated games individuals are allowed to renegotiate the cooperating group agreement through a process of voluntary participation we prove that a cooperating group forms as an absorbing state of a markov perfect equilibrium after a finite number of renegotiations if and only if the group is pareto efficient provided that individuals are patient the cooperating group can only expand

the evolution of institutions in india and its relationship with economic growth this paper examines the evolution in a few public institutions over time in india it presents three types of evidence on institutional outcomes such as losses in power generation backlogs in disposal of court cases on perceptions based measures of governance some going back to the 1960s and finally on customs administration and whether it has been more effective at detecting evasion over time all the evidence suggests that institutional quality has not improved over time it then addresses the two way relationship between growth and institutions in terms of two apparent paradoxes the first is why growth has turned around so dramatically in india despite the relatively limited nature of reforms especially compared with other countries the second paradox is why despite nearly 30 years of rapid growth institutions have not improved the paper offers some explanations that might help explain these paradoxes

endogenous structures of association in oligopolies the formulation of associations of firms in an oligopoly with linear demand is analyzed as a two stage noncooperative game in the first stage firms form associations in order to decrease their costs and in the second stage they compete on the market examples of associations include r d joint ventures and groups of firms adopting common standards in equilibrium the associations formed exhibit two general features they are asymmetric and inefficient

long run relationship between output capital labour and productivity in emerging market economies long run relationship between the variables involved in the production function is an issue that is important particularly in developing countries as the neoclassical production function is best suited for developed countries and its applicability to developing countries is questionable in various ways this motivates us to do this based on time series analysis taking indian textile industry as an example which is currently at its crucial stage as a critical industry in an emerging economy with the phasing out of multi fibre arrangement in 2005 this study documents existence of cointegration between capital and output negative impact of employment shocks on output changes substitutability between changes in capital and labour negative effect of shocks to changes in capital stock on productivity and negative effect of employment shocks on future productivity these results are in line with the general perceptions about this industry and with the standard neoclassical propositions as explained in t

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

india s missing girls biology customs and economic development we review the evidence on the sex ratio among children below the age of six international evidence shows that the sex ratio at birth is slightly biased towards boys but boys suffer greater mortality a pattern consistent with darwinian evolution with economic development the male bias in the child sex ratio increases south and east india show levels and trends in the child sex ratio that are consistent with this evidence however unbalanced sex ratios in the northern and western states since the first censuses indicate discrimination against girls technological developments permitting sex selective abortions have seriously aggravated the imbalances in these states economic modelling of parental choice regarding a child s gender suggests that gender imbalances may be consistent with individual maximization and marriage market equilibrium nevertheless these choices have adverse welfare consequences which will be aggravated by the decline in population growth and consequent relaxation of the marriage squeeze

the progress of school education in india this paper provides an overview of school education in india first it places india s educational achievements in international perspective particularly against countries with which it is now increasingly compared especially china second the paper examines schooling access in terms of enrolment and school attendance rates and schooling quality in terms of literacy rates learning achievement levels school resources and teacher inputs third the paper investigates the role of private schooling in india examining the extent of growth of private schooling and surveying evidence on the relative effectiveness and unit costs of private and public schools last the paper discusses some major public education initiatives the concluding section suggests a future research agenda and appeals for rigorous evaluation of the impacts and costs of the numerous existing educational interventions in order to learn about their relative cost effectiveness for evidence based policy making

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

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

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

standard errors for elasticities a comparison of bootstrap and asymptotic standard errors this article compares two methods of deriving standard errors for elasticities in a linear expenditure demand system with first order autoregressive errors the first is the ordinary taylor series method and the second is efron s bootstrap in an example problem these two methods yielded similar values for the standard errors with the exception of the income elasticity standard errors for which the asymptotic standard errors were apparently too large by a factor of two

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

capital inflows financial repression and macroeconomic policy in india since the reforms since the early 1990s the indian economy has seen a considerable relaxation of controls as a consequence of which it has witnessed unprecedented growth this is especially remarkable in the external sector in this paper i evaluate the progress made on the macroeconomic front and address the possibility of opening up the capital account of the balance of payments i show that given the weakness in the financial sector and the government finances it may be dangerous to speed up the process of opening up the capital account further

demand response in indian electricity market this paper outlines a methodology for implementing cost of service regulation in retail market for electricity in india when wholesale market is liberalised and operates through an hourly spot market as in a developing country context political considerations make tariff levels more important than supply security satisfying the earmarked level of demand takes a back seat retail market regulators are often forced by politicians to keep the retail tariff at suboptimal level this imposes budget constraint on distribution companies to procure electricity that it requires to meet the earmarked level of demand this is the way demand response is introduced in the system and has its impact on spot market prices we model such a situation of not being able to serve the earmarked demand as disutility to the regulator which has to be minimised and we compute associated equilibrium this results in systematic mechanism for cutting loads we find that even a small cut in ability of the distribution companies to procure electricity from the spot market has profound impact on the prices in the spot market

stochastic stability under logit choice in coalitional bargaining problems abstract this study examines a dynamic process of n person coalitional bargaining problems we investigate the evolution of social conventions by embedding a coalitional bargaining setting in a dynamic process in each period a group of players may make some coalitional move that is forming a new team or negotiating the division of a surplus players revise their coalitions and surplus divisions over time in the presence of stochastic noise which leads players to make a suboptimal decision under a logit specification of choice probabilities we find that the stability of a core allocation decreases in the wealth of the richest player furthermore stochastically stable allocations are core allocations that minimize the wealth of the richest player

coalitions tipping points and the speed of evolution this study considers pure coordination games on networks and the waiting time for an adaptive process of strategic change to achieve ecient coordination although it is in the interest of every player to coordinate on a single globally ecient norm coalitional behavior at a local level can greatly slow as well as hasten convergence to eciency

a consistent bargaining set abstract both the core and the bargaining set fail to satisfy a natural requirement of consistency in excluding imputations to which there exist objections the core does not assess the credibility of such objections the bargaining set goes a step further only objections which have no counterobjections are considered justified however the credibility of counterobjections is not similarly assessed we formulate a notion of a consistent bargaining set in which each objection in a chain of objections is tested in precisely the same way as its predecessor various properties of the consistent bargaining set are also analyzed

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

the back scratching game we develop a new experiment to study the emergence of welfare reducing bilateral alliances within larger groups and the effectiveness of institutional interventions to curtail back scratching in each of the 25 rounds of our experiments a player the allocator nominates one of three others in a group as a co worker the receiver which determines the group production that period to be the productivity of the receiver which varies by round but also gives the receiver a bonus and makes them the allocator in the next round alliances then form if two individuals keep choosing each other even when their productivities are lower than that of others causing efficiency losses we study whether particular interventions reduce the rate of alliance formation random allocator rotation policies were found to be ineffective whether implemented prior to or following a baseline treatment low bonuses did significantly reduce the advent of alliances there hence seems to be some hope in preventing back scratching via reducing the gain that can be made by alliances

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

the coalitional nash bargaining solution the coalitional nash bargaining solution is defined to be the core allocation for which the product of players payoffs is maximal we consider a non cooperative model with discounting in which one team may form and every player is randomly selected to make a proposal in every period the grand team consisting of all players generates the largest surplus but a smaller team may form we show that as players get more patient if an efficient and stationary equilibrium exists it must deliver payoffs that correspond to the coalitional nash bargaining solution we also characterize when an efficient and stationary equilibrium exists which requires conditions that go beyond the nonemptiness of the core

top indian incomes 1922 2000 this article presents data on the evolution of top incomes and wages for 1922 2000 in india using individual tax return data the data show that the shares of the top 0 01 percent 0 1 percent and 1 percent in total income shrank substantially from the 1950s to the early to mid 1980s but then rose again so that today these shares are only slightly below what they were in the 1920s and 1930s this u shaped pattern is broadly consistent with the evolution of economic policy in india from the 1950s to the early to mid 1980s was a period of socialist policies in india whereas the subsequent period starting with the rise of rajiv gandhi saw a gradual shift toward more pro business policies although the initial share of the top income group was small the fact that the rich were getting richer had a nontrivial impact on the overall income distribution although the impact is not large enough to fully explain the gap observed during the 1990s between average consumption growths shown in national sample survey based data and the national accounts based data it is sufficiently large to explain a non negligible part of it

the changing pattern of foreign trade specialization in indian manufacturing this paper examines the pattern of international trade specialization in indian manufacturing since the mid 1980s by using data on trade flows low technology sectors still dominate the categories for which india exhibits the largest degree of trade specialization by contrast high technology sectors are prevalent among the categories for which india is import dependent significantly india has experienced an improvement in the degree of specialization in some of the most dynamic sectors of world trade

india s development in the era of growth the recent growth pattern of india is set in the context of the parallel experience of china the experience of poverty reduction is reviewed and a number of papers illuminating india s development are introduced

contracting with externalities and outside options this paper proposes a model of multilateral contracting where players are engaged in two parallel interactions they dynamically form coalitions and play a repeated normal form game with temporary and permanent decisions we show that when outside options are independent of the actions of other players all markov perfect equilibrium without coordination failures are efficient regardless of externalities created by interim actions otherwise in the presence of externalities on outside options all markov perfect equilibrium may be inefficient this formulation encompasses many economic models and we analyze the distribution of coalitional gains and the dynamics of coalition formation in four illustrative applications

is india s economic growth leaving the poor behind there has been much debate about how much india s poor have shared in the economic growth unleashed by economic reforms in the 1990s the authors argue that india has probably maintained its 1980s rate of poverty reduction in the 1990s however there is considerable diversity in performance across states this holds some important clues for understanding why economic growth has not done more for india s poor india s economic growth in the 1990s has not been occurring in the states where it would have the most impact on poverty nationally if not for the sectoral and geographic imbalance of growth the national rate of growth would have generated a rate of poverty reduction that was double india s historical trend rate states with relatively low levels of initial rural development and human capital development were not well suited to reduce poverty in response to economic growth the study s results are consistent with the view that achieving higher aggregate economic growth is only one element of an effective strategy for poverty reduction in india the sectoral and geographic composition of growth is also important as is the need to redress existing inequalities in human resource development and between rural and urban areas

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

dynamic coalition reformation for adaptive demand and capacity sharing abstract to deal with volatile product demand and rapidly changing manufacturing technologies for sustainable returns selective collaboration among companies in supply networks sns is required recently demand and capacity sharing among independent and non competitive manufacturers at the same horizontal layer in sns has been studied through an appropriate coalition for collaborative demand and capacity sharing manufacturers can minimize their lost sales as well as maximize production capacity utilization against lumpy real demand in a previous study we have developed the collaborative demand and capacity sharing cdcs protocol which addresses a long term profitable and well balanced collaboration for each manufacturer through distributed decision making however the uncertainty of circumstances calls for an effective and timely reformation of coalitions in reality there is a trade off between frequent accommodation to changeable environments and high additional costs incurred by reformation hence in this paper we design the adaptive cdcs protocol based on dynamic contract mechanism in each period our protocol suggests whether to reform existing coalitions or not based on theoretical analyses of long term expected net profit to evaluate its performance a numerical experiment is conducted by comparing three models no collaboration static collaboration and dynamic collaboration by adaptive cdcs protocol dynamic collaboration results in more profits and its balanced redistribution by accommodating with changeable conditions

endogenous formation of coalitions the formation of coalitions is a fundamental problem in game theory by a coalition is meant a group of players e g economic or political agents which decide to act together as one unit relative to the rest of the players this includes the instances of syndicates unions cartels blocks political parties parliamentary coalitions etc we would like to emphasize that forming a coalition does not eliminate the individual players as decision makers in all interactions with the other players coalition members act as one unit it may be useful to think of a representative agent taking their place 2 however this arrangement will continue only as long as each player finds it desirable to act this way further bargaining occurs among the members of each coalition on how to divide what they obtained together thus the existence of coalitions implies that the interactions among the players will be conducted on two levels first among the coalitions and second within each coalition most of the existing models in economics and game theory assume that the coalition structure is given exogenously instead we try here to obtain it as an endogenous outcome of our model namely we want to be able to predict which coalitions will in fact form in each given situation 3 our theory combines two kinds of game theoretic concepts value and stability the basic idea is first to evaluate the players prospects in the various coalition structures and then based on these values to find which ones are stable we will call this value coalition structure value or cs value for short the reason we are considering coalition structures i e partitions of the set of players into disjoint coalitions rather than just coalitions is that in general players may find it to their advantage to join forces in some situations and to act separately in others all depending on the way the other participants are organized this implies that both the value and the stability concepts should depend on the entire coalition structure the cs value we analyze in this paper was first developed by owen 7

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

allocation of cost savings in a three level supply chain with demand information sharing a cooperative game approach we analyze the problem of allocating cost savings from sharing demand information in a three level supply chain with a manufacturer a distributor and a retailer to find a unique allocation scheme we use concepts from cooperative game theory first we analytically compute the expected cost incurred by the manufacturer and then use simulation to obtain expected costs for the distributor and the retailer we construct a three person cooperative game in characteristic function form and derive necessary conditions for the stability of each of five possible coalitions to divide the cost savings between two members or among three supply chain members we use various allocation schemes we present numerical analyses to investigate the impacts of the demand autocorrelation coefficient and the unit holding and shortage costs on the allocation scheme

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

the dynamics of coalition formation a multilateral bargaining experiment with free timing of moves abstract we experimentally investigate behavior in a finitely repeated coalition formation game played in continuous time subjects interact in groups of three bargaining over the distribution of payments which occur at regular time intervals during a given interval payments occur if and only if a majority is in agreement about their allocation aside from these rules we purposefully impose little structure on the bargaining process we investigate the frequency and stability of different types of agreements as well as transitions between them two thirds of payments involve divisions where one player receives nothing almost half of which are equal splits of the entire surplus between two players the most stable division is the three way equal split transitions between agreements are frequent and are generally consistent with myopic payoff maximization in the sense that subjects do not accept short term losses we also find that transitions between coalitions are not markovian in particular players more often forgo short term gains in order to remain in a coalition if it has proven stable in the past

confining the coase theorem contracting ownership and free riding if individuals own the right to take any action that they please and are free to contract about behaviour will outcomes be efficient in all situations that is does the coase theorem hold we study this classic question through the lens of a non cooperative model of contract negotiations considering both compulsory and voluntary participation in negotiations in either case we find that all consistent equilibria of the contracting game are efficient in the case of two players but if participation is voluntary and there are more than two players there are situations in which all consistent equilibria are inefficient specifically the provision of public goods tends to be inefficiently low due to strategic abstention from contracting free riding on others agreements can be avoided if individuals do not own all their actions when actions involve the use of assets efficient action ownership may correspond to collective rather than individual asset ownership

coalitional stochastic stability abstract this paper takes the idea of coalitional behavior groups of people occasionally acting together to their mutual benefit and incorporates it into the framework of evolutionary game theory that underpins the social learning literature an equilibrium selection criterion is defined which we call coalitional stochastic stability css this differs from existing work on stochastic stability in that profitable coalitional deviations are given greater importance than unprofitable single player deviations a general characterization of css is given together with more detailed characterizations for specific classes of games applications include contracting asymmetric social norms and collusive price setting the latter of which is shown in some circumstances to facilitate competitive outcomes

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

group formation in risk sharing arrangements we study informal insurance within communities explicitly recognizing the possibility that subgroups of individuals may destabilize insurance arrangements among the larger group we therefore consider self enforcing risk sharing agreements that are robust not only to single person deviations but also to potential deviations by subgroups however such deviations must be credible in the sense that the subgroup must pass exactly the same test that we apply to the entire group it must itself employ some self enforcing risk sharing agreement we observe that the stability of subgroups is inimical to the stability of the group as a whole two surprising consequences of this analysis are that stable groups have uniformly bounded size a result in sharp contrast to the individual deviation problem and that the degree of risk sharing in a community is generally non monotonic in the level of uncertainty or need for insurance in the community

coalition formation with binding agreements we study coalition formation in real time a situation in which coalition formation is intertwined with the ongoing receipt of pay offs agreements are assumed to be permanently binding they can only be altered with the full consent of existing signatories for characteristic function games we prove that equilibrium processes whether or not these are history dependent must converge to efficient absorbing states for three player games with externalities each player has enough veto power that a general efficiency result can be established however there exist four player games in which all markov equilibria are inefficient from every initial condition despite the ability to write permanently binding agreements copyright 2007 wiley blackwell

a noncooperative theory of coalitional bargaining the authors explore a sequential offers model of n person coalitional bargaining with transferable utility and with time discounting their focus is on the efficiency properties of stationary equilibria of strictly superadditive games when the discount factor delta is sufficiently large it is shown that delay and the formation of inefficient subcoalitions can occur in equilibrium the latter for some or all orders of proposer however efficient stationary equilibrium payoffs converge to a point in the core as delta approaches one strict convexity is a sufficient condition for there to exist an efficient stationary equilibrium payoff vector for sufficiently high delta

separability and capital aggregation in sectoral models of us production separability plays a fundamental role in applied studies of production inasmuch as it provides for consistent aggregation and allows multi stage estimation of models with many inputs this paper examines whether two types of capital structures and equipment are weakly separable from labour and energy and materials in sectoral models of us production and provides an assessment of the effects of maintaining capital separability the study focuses on the elasticity of substitution as a measure of input association and associated standard errors and confidence intervals based on bootstrapping elasticity estimates and tests indicate that capital separability is generally inconsistent with data representing sectoral us production elasticity sign however appears robust to capital aggregation and performs especially well as an indicator of input association

farsighted network formation this paper studies a model of dynamic network formation when individuals are farsighted players evaluate the desirability of a current move in terms of its consequences on the entire discounted stream of payoffs we define a concept of equilibrium which takes into account farsighted behavior of agents and allows for limited cooperation amongst agents we show that an equilibrium process of network formation exists we also show that there are valuation structures in which no equilibrium strategy profile can sustain efficient networks we then provide sufficient conditions under which the equilibrium process will yield efficient outcomes

systematic effects of capital service price definition on perceptions of input substitution earlier attempts at reconciling disparate substitution elasticity estimates examined differences in separability hypotheses data bases and estimation techniques as well as methods employed to construct capital service prices although these studies showed that differences in elasticity estimates between two or three studies may be attributable to the aforementioned features of the econometric models they have been unable to demonstrate this link statistically and establish the existence of systematic relationships between features of the econometric models and the perception of production technologies generated by those models using sectoral data covering the entire production side of the u s economy we estimate 34 production models for alternative definitions of the capital service price we employ substitution elasticities calculated from these models as dependent variables in the statistical search for systematic relationships between features of the econometric models and perceptions of the sec

new indices of money supply and the flexible laurent demand system the article begins by surveying the existing results on the new divisia monetary aggregates charts display the differences in behavior between the divisia aggregates and the federal reserve s official simple sum monetary aggregates the article then compares system wide fit for the simple sum and divisia monetary aggregates when used as data in the joint estimation of a system of demand equations the demand system is derived from a new laurent expansion approximation to the reciprocal indirect utility function the laurent expansion provides a better behaved remainder term than that of the more commonly used taylor series the results favor the divisia aggregates

a property of the core abstract for any transferable utility game in coalitional form with nonempty core we show that given any allocation outside the core there is an allocation in the core that indirectly dominates it journal of economic literatureclassification number c71

a noncooperative coalitional bargaining game with random proposers abstract we extend the stahl rubinstein s alternating offer model ton person coalitional bargaining the key feature of the model is the random selection of proposers at every round no delay of agreement occurs in equilibrium for a super additive game in contrast to the fixed order model of chatterjeeet al rev econ stud 60 1993 463 477 when the discount factor of future payoffs is sufficiently high the agreement on the grand coalition is reached if and only if it has the largest value per capita among all coalitions moreover in the limit as the discount factor goes to one all players divide equally the value of the grand coalition regardless of who makes a proposal journal of economic literatureclassification numbers c72 c73 c78

the stability of hedonic coalition structures we consider the partitioning of a society into coalitions in purely hedonic settings i e where each player s payoff is completely determined by the identity of other members of her coalition we first discuss how hedonic and nonhedonic settings differ and some sufficient conditions for the existence of core stable coalition partitions in hedonic settings we then focus on a weaker stability condition individual stability where no player can benefit from moving to another coalition while not hurting the members of that new coalition we show that if coalitions can be ordered according to some characteristic over which players have single peaked preferences or where players have symmetric and additively separable preferences then there exists an individually stable coalition partition examples show that without these conditions individually stable coalition partitions may not exist we also discuss some other stability concepts and the incompatibility of stability with other normative properties journal of economic literature classification numbers c71 a14 d20

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

confidence intervals for elasticity estimators in translog models this paper examines the distribution fu nctions of elasticity estimators in translog demand models the authors consider the normaland ratio of normals distributions and present confidence intervals for the elasticity estimators the results suggest that only elasticity estimato rs based on the means of the actual cost shares are likely to follow either the normal or ratio of normals distribution function examination of three published empirical studies demonstrates that inferences regarding the values of elasticities cannot be made from point estimates alone and suggests a trade off between the level of aggregation and the width of confidence intervals for the elasticit y estimators copyright 1986 by mit press

a delayed revolution environment and agrarian change in india slow growth of agricultural income has contributed to poor economic growth and poverty in india in modern times the condition was weakened by green revolutions in the last third of the twentieth century conventional accounts attribute the stagnation to institutions created during colonial rule in india this article suggests instead that it derived from an environmental constraint the green revolutions succeeded partly because state aid enabled peasants to overcome the constraint in some regions

land reform and agricultural productivity in india a review of the evidence in this paper we review as well as contribute to the empirical literature on the impact of land reform on agricultural productivity in india we find that overall for all states land reform legislation had a negative and significant effect on agricultural productivity however this hides considerable variation across types of land reform as well as variation across states decomposing by type of land reform the main driver for this negative effect seems to be land ceiling legislation in contrast the effect of tenancy reform averaged across all states is insignificant there seems to be a wide range of state specific effects which suggests that focusing on average treatment effects can hide a considerable amount of heterogeneity in particular allowing a separate slope for west bengal one of the few states that implemented tenancy laws rigorously we find that land reform had a marginal positive effect relative to the rest of india

to deter or to moderate alliance formation in contests with incomplete information we consider two players choice about the formation of an alliance ahead of conflict in a framework with incomplete information about the strength of the potential ally when deciding on alliance formation players anticipate the self selection of other players and the informational value of own and other players choices in the absence of these signaling effects strong players have an incentive to stand alone which leads to a separating equilibrium this separating equilibrium can be destabilized by deception incentives if beliefs are updated on the basis of endogenous alliance formation choices weak players may find it attractive to appear strong in order to deter competitors from positive effort choices strong players may find it attractive to appear weak in order to give their competitors a false sense of security and then beat them with little effort moreover appearing weak allows players to free ride when alliances are formed jel d72 d74

transshipment of inventories among retailers myopic vs farsighted stability the author considers a model of a decentralized distribution system consisting of n retailers selling an identical product retailers face a stochastic demand and must order their initial inventory before this demand is realized after demand realization retailers decide how much of their unsold inventory or unsatisfied demand they want to share with other retailers this is followed by a transshipment of leftover inventories and distribution of the additional profit generated through inventory sharing the author addresses the following issue suppose that the retailers distribute the profit from inventory sharing according to an allocation rule that induces retailers to share their residuals in a way that maximizes the additional profit such as the shapley value but may not belong to the core is it likely that in this framework all retailers will jointly share their residuals and not form subcoalitions previous research has looked at this problem from a myopic viewpoint and concluded that the grand coalition is not stable unlike the prior work the author looks at stability in a farsighted sense that is retailers do not consider only their immediate payoffs but are also concerned with reactions of other retailers to their actions in a symmetric setting with identical additional unit revenues from transshipments generated by all retailers farsighted retailers always maximize their allocations by not defecting from the grand coalition the author also provides conditions when the same is true for nonidentical additional unit revenues

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