Competitive equilibria and robust efficiency with club goods

Abstract

The paper studies the club equilibria in a setting where individuals not only trade private goods but can choose to become members of a finite number of clubs, where each club is defined by the external characteristics of its members and the activity in which the club is engaged. The main objective of the paper is to characterize the club equilibria in terms of robustly efficient states. In other words, we attempt to provide a characterization of club equilibria using the veto power of the grand coalition, i.e., rather than considering the blocking power of infinitely many coalitions as in the case of core allocations, we only take the coalition comprising all agents and study its blocking power in a group of economies obtained by slightly modifying agents’ initial endowments.