Abstract
We consider a finite society with of individuals distributed along the real line. The individuals form jurisdictions to consume public projects, equally share their costs and, in addition, bear a transportation cost to the location of the project. We examine a core and Nash notions of stable jurisdiction structures and show that in hedonic games both solution sets could be empty. We demonstrate that in a quasi-hedonic set-up there is a Nash stable partition, but, in general, there are no core stable partitions. We then examine a subclass of societies that admits the existence of both types of stable partitions.
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We wish to thank an anonymous referee for useful comments.
Financial support through grants R98-0631 from the Economic Education and Research Consortium, # NSh-1939.2003.6 School Support, Russian Foundation for Basic Research No. 04-02-17227, and the Russian Science Support Foundation is gratefully acknowledged.
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Bogomolnaia, A., Le Breton, M., Savvateev, A. et al. Stability of jurisdiction structures under the equal share and median rules. Economic Theory 34, 525–543 (2008). https://doi.org/10.1007/s00199-006-0198-z
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DOI: https://doi.org/10.1007/s00199-006-0198-z