Price taking equilibrium in economies with multiple memberships in clubs and unbounded club sizes

This paper develops a model of an economy with clubs where individuals may belong to multiple clubs and where there may be ever increasing returns to club size. A club is a group of individuals who have formed an organization for the benefit of the group members. Clubs may be large, as large as the total agent set. The main condition required is that sufficient wealth can compensate for memberships in larger and larger clubs. This paper originally appeared as University of Warwick Department of Economics Working Paper # 639 (2002). The paper was presented at: the Athens General Equilibrium Conference, May 2002; PET 2002, June 2002; Social Choice and Welfare, July 2002; ESEM August, 2002, the Illinois Economic Theory Workshop, April 2003. the University of Chicago in 2005 and Oxford in 2006. We thank the participants and especially John Conley, James Heckman, Frank Page, Philip Reny, and Ben Zissimos for comments. We are also greatly indebted to two anonymous referees who encouraged us to substantially revise and thus improve the paper.