The Number of Organizations in Heterogeneous Societies

Jo Thori Lind

Memo 08/2010

Last ned memo

I consider a society with heterogeneous individuals who can form organizations for the production of a di erentiated service. An arrangement of organizations is said to be split up stable when there is no majority to split any of the organizations. Unlike other equilibrium concepts in the literature, the largest number of organizations that is split up stable corresponds to the socially optimal number of organizations, with a possibility of over provision of one organization. The analysis is extended to a case with endogeneous membership, where it is shown that the results remain the same.

Published June 20, 2014 1:26 PM - Last modified Jan. 24, 2019 11:43 AM