Inequality and Coalitions Size Essay -- American History, Revenues

The interrelations of social segregation and Inequality have been largely studied by several authors (Fernà ¡ndez y Rogerson, 1996 y 1997; Bà ©nabou 1996a y 1996b; Gravel y Thoron, 2007; Durlauf, 1996). Nevertheless, the majority of these studies have concentrated in demonstrating the possibility of a segregated equilibrium. This last is understood as the formation of consecutive clubs, ordered in accordance with a variable that represents the social position of the economic agents. In the majority of the studies, this variable is the wealth of the persons or his human capital. The problem with this kind of models is that they do not study the effect of the income distribution over the degree of segregation. As a result, they can't answer questions like the following: the size of the coalitions decrease with the degree of wealth inequality? In a society, the size of the coalitions formed by wealthy agents are bigger than the coalition of the poor ones? This is an important weakness of this type of literature. In effect, the collective interrelation inside coalitions can determine the accumulation of social capital and human capital, and it is well-known that the both are essentials factors in economic development (Benabou, 1996a; Glomm y Ravikumar, 1992; Fernà ¡ndez y Rogerson, 1996; Durlauf, 1996) Some authors as Bà ©nabou (1996th) and Glomm and Ravikumar (1992) compare the economic and distributive outcomes of integrated versus segregated societies. That kind of analysis is relevant to analyze problems such as the benefits and cost of public versus private education. Nevertheless, it is not very useful in analysing other problems as the determinants and the consequences of Social segregation. In this paper, we study t... ...artition. Jehiel and Scotchmer (1997 and 2001) characterise the free mobility equilibrium. However, they do not introduce heterogeneity in the distribution of wealth, and they suppose a very unrealistic utility function (linear). Moreover, their distribution of characteristics of agents is very narrow (uniform). Finally, they have not made the comparative static exercises required to understand the relationship between the heterogeneity of the agents and the degree of social segregation. Most of the models that demonstrate the existence of a consecutive core equilibrium, use super additive and cooperative games. (Greenber y Weber, 1986; Demange, 1982 y 1994). However, this kind of model have two defects. First, although they demonstrate the existence of a consecutive equilibrium, they do not analyze the effect of inequality on the size of coalitions.