This chapter studies two applications of the theory developed so far. First, coalition formation in a Cournot oligopoly is examined. The second application studies coalition formation in a pollution control problem. In both these applications, equilibrium agreements and coalition structures are characterized by applying the algorithm developed in Chapter 5. While there are some differences between the two applications, they share the following common features: (a) inefficient outcomes are endemic despite the ability to write any binding agreement; (b) inefficient outcomes in symmetric games typically involve asymmetric coalition structures; but (c) the degree of inefficiency cannot be ‘too high’, in a sense made precise in the chapter.
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