STABLE COALITION STRUCTURES WITH A UNIDIMENSIONAL SET OF ALTERNATIVES

We identify a class of economic and political environments that admit an “S-equilibrium,” where both free mobility and free entry are allowed. We further study the relationship between the set of S-equilibria and the sets of strong and coalition-proof Nash equilibria in the noncooperative coalition formation game, which is closely related to the one originally studied by J. von Neumann and O. Morgenstern (“Theory of Games and Economic Behaviour,” Princeton Univ. Press, Princeton, NJ, 1944). We also show that the set of S-equilibria induces a proper subset of the coalition structure core of the corresponding characteristic function form. Journal of Economic Literature Classification Numbers: C71, C72. © 1993 by Academic Press, Inc.