The word ‘club’ has a deceptively frivolous connotation, as does the word ‘game’. But, like game theory, club theory has wide reach. By ‘club’ economists mean a small group of people sharing an activity, often in a context where they care about each other’s characteristics. Such activities may include production of goods and services (firms), production of education (schools, academic departments), sharing of private goods in small groups, and community life (churches, charity organizations). The formation of firms, choice of schools, and choice of games to play are all covered by club theory, as are social arrangements like marriage.
KeywordsBundling Capitalization Club theory Clubs Competitive equilibrium Congestion Consumption Education Expected utility Externalities Games Group formation Group type Land markets Local public goods Lotteries Moral hazard Multiple equilibria Public goods Schools as clubs
- Duffie, D. and Y. Sun 2004a. Existence of independent random matching, Working paper. Graduate School of Business, Stanford University.Google Scholar
- Duffie, D. and Y. Sun 2004b. The exact law of large numbers for independent random matching, Working paper. Graduate School of Business, Stanford University.Google Scholar
- Ellickson, B., B. Grodal, S. Scotchmer, and W. Zame. 2005. The organization of consumption, production and learning. In The Birgit Grodal symposium, ed. K. Vind. Berlin: Springer-Verlag.Google Scholar
- Scotchmer, S. 2002. Local public goods and clubs. In Handbook of public economics, ed. A. Auerbach and M. Feldstein, vol. 4. Amsterdam: North-Holland.Google Scholar
- Scotchmer, S. and C. Shannon. 2007. Verifiability and group formation in markets, Working paper E07–347. Department of Economics, University of California, Berkeley.Google Scholar
- Zame, W. 2005. Incentives, contracts and markets – a general equilibrium theory of firms, Working paper no. 843. Department of Economics, University of California Los Angeles.Google Scholar