Cooperative Production and Efficiency

  • Authors: Luis C. Corchón and Carmen Beviá.
  • BSE Working Paper: 305 | September 15
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Abstract

We characterize the sharing rule for which a contribution mechanism achieves efficiency in a cooperative production setting when agents are heterogeneous. The sharing rule bears no resemblance to those considered by the previous literature. We also show for a large class of sharing rules that if Nash equilibrium yields efficient allocations, the production function displays constant returns to scale, a case in which cooperation in production is useless.

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