Department of Economics Price Taking Equilibrium in Club

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. 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. Notions of price taking equilibrium and the core, both with communication costs, are introduced. These notions require that there is a small cost, called a communication cost, of deviating from a given outcome. With some additional standard sorts of assumptions This paper originally appeared as University of Warwick Department of Economics Working Paper # 639 (2002). This paper was presented at: the Athens General Equilibrium Conference, May 2002; PET 2002, June 2002; Social Choice and Welfare, July 2002; ESEM August, 2002, and; the Illinois Economic Theory Workshop, April 2003. We thank the participants and John Conley, Frank Page and Ben Zissimos for comments and for references to the literature.