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A Model of Partnership Formation

Author

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  • Talman, A.J.J.

    (Tilburg University, Center For Economic Research)

  • Yang, Z.F.

Abstract

This paper presents a model of partnership formation. A number of agents want to conduct some business or other activities. Agents may act alone or seek a partner for cooperation and need in the latter case to consider with whom to cooperate and how to share the profit in a collaborative and competitive environment. We provide necessary and sufficient conditions under which an equilibrium exists. In equilibrium, the partnership formation and the payoff distribution are endogenously determined. Every agent realizes his full potential and has no incentive to deviate from either staying independent or from the endogenously determined partner and payoff. The partnership formation problem contains the widely studied assignment market problem as a special case.
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Suggested Citation

  • Talman, A.J.J. & Yang, Z.F., 2008. "A Model of Partnership Formation," Discussion Paper 2008-103, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:69e159c9-1700-49f0-ad7f-f863a9d12590
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. David Pérez-Castrillo & Marilda Sotomayor, 2023. "Constrained-optimal tradewise-stable outcomes in the one-sided assignment game: a solution concept weaker than the core," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(3), pages 963-994, October.
    2. Bettina Klaus & Alexandru Nichifor, 2010. "Consistency in one-sided assignment problems," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 35(3), pages 415-433, September.
    3. Bester, Helmut, 2013. "Investments and the holdup problem in a matching market," Journal of Mathematical Economics, Elsevier, vol. 49(4), pages 302-311.
    4. Akiyoshi Shioura, 2017. "On the Partnership formation problem," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 2(1), pages 105-140, December.
    5. Alkan, Ahmet & Anbarci, Nejat & Sarpça, Sinan, 2012. "An exploration in school formation: Income vs. Ability," Economics Letters, Elsevier, vol. 117(2), pages 500-504.
    6. Gudmundsson, Jens, 2013. "Cycles and Third-Party Payments in the Partnership Formation Problem," Working Papers 2013:16, Lund University, Department of Economics.
    7. Pierre-André Chiappori & Alfred Galichon & Bernard Salanié, 2012. "The Roommate Problem is More Stable than You Think," Working Papers hal-03588302, HAL.
    8. Stéphane Bonhomme, 2021. "Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice," Working Papers 2021-15, Becker Friedman Institute for Research In Economics.
    9. Andersson, T. & Erlanson, A. & Gudmundsson, J. & Habis, H. & Ingebretsen Carlson, J. & Kratz, J., 2014. "A method for finding the maximal set in excess demand," Economics Letters, Elsevier, vol. 125(1), pages 18-20.
    10. Jens Gudmundsson, 2014. "Sequences in Pairing Problems: A new approach to reconcile stability with strategy-proofness for elementary matching problems," 2014 Papers pgu351, Job Market Papers.
    11. Andersson, Tommy & Gudmundsson, Jens & Talman, Dolf & Yang, Zaifu, 2014. "A competitive partnership formation process," Games and Economic Behavior, Elsevier, vol. 86(C), pages 165-177.
    12. repec:hal:spmain:info:hdl:2441/3sd5loegec9d3o795888da61tp is not listed on IDEAS
    13. Pierre-André Chiappori & Alfred Galichon & Bernard Salanié, 2012. "The Roommate Problem is More Stable than You Think," Working Papers hal-03588302, HAL.
    14. Inés Macho-Stadler & David Pérez-Castrillo, 2021. "Agency theory meets matching theory," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(1), pages 1-33, March.
    15. Teytelboym, Alexander, 2014. "Gross substitutes and complements: A simple generalization," Economics Letters, Elsevier, vol. 123(2), pages 135-138.
    16. Alejandro Francetich, 2023. "When partner knows best: asymmetric expertise in partnerships," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(2), pages 363-399, June.
    17. Pierre-André Chiappori & Alfred Galichon & Bernard Salanié, 2019. "On Human Capital and Team Stability," Journal of Human Capital, University of Chicago Press, vol. 13(2), pages 236-259.
    18. Stephane Bonhomme, 2021. "Teams: Heterogeneity, Sorting, and Complementarity," Papers 2102.01802, arXiv.org.
    19. Pierre-Andr'e Chiappori & Alfred Galichon & Bernard Salani'e, 2021. "On Human Capital and Team Stability," Papers 2102.06487, arXiv.org.
    20. Gudmundsson, Jens, 2011. "On symmetry in the formation of stable partnerships," Working Papers 2011:29, Lund University, Department of Economics.

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    More about this item

    Keywords

    Partnership formation; equilibrium; indivisibility; assignment market;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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