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Economic Theory

, Volume 60, Issue 2, pp 315–343 | Cite as

Sharing the surplus in games with externalities within and across issues

  • Effrosyni Diamantoudi
  • Inés Macho-Stadler
  • David Pérez-CastrilloEmail author
  • Licun Xue
Research Article

Abstract

We consider issue-externality games in which agents can cooperate on multiple issues and externalities are present both within and across issues, that is, the amount a coalition receives in one issue depends on how the players are organized on all the issues. Examples of such games are several firms competing in multiple markets, and countries negotiating both a trade agreement (through, e.g., WTO) and an environmental agreement (e.g., Kyoto Protocol). We propose a way to extend (Shapley) values for partition function games to issue-externality games. We characterize our proposal through axioms that extend the Shapley axioms to our more general environment. The solution concept that we propose can be applied to many interesting games, including inter-temporal situations where players meet sequentially.

Keywords

Externalities Cooperative game theory Shapley value Linked issues 

JEL Classification

C71 D62 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  • Effrosyni Diamantoudi
    • 1
  • Inés Macho-Stadler
    • 2
  • David Pérez-Castrillo
    • 2
    Email author
  • Licun Xue
    • 3
  1. 1.CIREQ and Department of EconomicsConcordia UniversityMontrealCanada
  2. 2.Dept. Economía e Hist. EconómicaUniversitat Autonoma de Barcelona, Barcelona GSEBellaterraSpain
  3. 3.CIREQ and Department of EconomicsMcGill UniversityMontrealCanada

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