Abstract
The incentive for potential club members to form private good clubs is an average cost function that is decreasing over at least part of its range. Benefits to club members are measured by consumer's surplus, and a game theoretic characteristic function is used to describe total club benefits. Then, in the game framework, the optimum club size is examined and related to the existence of the core, which in turn is shown to be crucially dependent on the demand and cost curves.
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