The Veto Mechanism Revisited
It is difficult to argue that coalition formation is costless and free. In this paper, only a subset of the set of all possible coalitions in an economy or a game, is considered to be really formed. The consequences that such restriction has on the veto mechanism are analyzed. The restricted veto mechanism is extended to the pondered veto mechanism with rates of participation of the the players. It is shown that it is enough to consider the veto power of a subsetSof coalitions, which differs from the set of all coalitions, in order to obtain the Walrasian allocations or, alternatively, the Edgeworth equilibria. In particular, it is shown that the pondered veto power, with rates of participation arbitrarily close to one, of only one coalition, namely, the coalition of all agents, blocks any non Walrasian allocation.
Keywordscoalitions core fuzzy core Edgeworth equilibrium exchange economy continuum economy Walrasian equilibrium
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