Stable Farsighted Coalitions in Competitive Markets

Supplement to Stable Farsighted Coalitions in Competitive Markets - Technical Appendix

Maximality in the Farsighted Stable Set

The stable set of von Neumann and Morgenstern imposes credibility on coalitional deviations. Their credibility notion can be extended to cover farsighted coalitional deviations, as proposed by Harsanyi (1974), and more recently reformulated by Ray and Vohra (2015). However, the resulting farsighted stable set suffers from a conceptual drawback: while coalitional deviations improve on existing o...

Farsighted House Allocation

In this note we study von Neumann-Morgenstern farsightedly stable sets for Shapley and Scarf (1974) housing markets. Kawasaki (2008) shows that the set of competitive allocations coincides with the unique von Neumann-Morgenstern stable set based on a farsighted version of antisymmetric weak dominance (cf., Wako, 1999). We demonstrate that the set of competitive allocations also coincides with t...

Dynamic farsighted stability∗

We study farsighted stability under the assumption that coalitions may condition actions on the history of the play. vNM stable set over possible play paths is defined with respect to the indirect dominance relation. We show that such dynamic stable set always exists. It is characterized by a generalization of the ultimate uncovered set. In unbounded agenda setting context, the dynamic stable s...

Bottom-Up Strategic Linking of Carbon Markets: Which Climate Coalitions Would Farsighted Players Form?

We present typical scenarios and general insights from a novel dynamic model of farsighted climate coalition formation involving market linkage and cap coordination, using a simple analytical model of the underlying cost-benefit structure. In our model, the six major emitters of CO2 can link domestic cap-and-trade systems to form one or several international carbon markets, and can either choos...