ON PRICE-TAKING EQUILIBRIA IN CLUB ECONOMIES WITH NONANONYMOUS CROWDING

Competitive equilibrium in a coalition production economy or a club ec onomy typically does not exist when there is free entry, for two reaso ns. First, there may be an ''integer problem'', as is familiar from cl ub theory with anonymous crowding. Second, ''optimal'' groups may have different compositions from the population, and then even if there is no integer problem, it may be impossible to partition the population into optimal groups. I define a notion of approximate equilibrium and show that such an equilibrium always exists in a sufficiently large ec onomy. I focus on the optimal size of the economy rather than of clubs .