Clubs and the Market ¤ Bryan Ellickson Department of Economics University of California, Los Angeles Birgit Grodal Institute of Economics University of Copenhagen Suzanne Scotchmer Department of Economics and Graduate School of Public Policy University of California, Berkeley William R. Zame Department of Economics University of California, Los Angeles April 1997 September 18, 1998 (Final Version) ¤ We thank Robert Anderson for tutelage and Kenneth Arrow and Joe Ostroy for helpful arguments. We thank seminar audiences at CalTech, the Conference on City Formation at Washington University in St. Louis, the Midwest Mathematical Economics Meetings (Fall 1996), the Public Choice Society Meetings, the Santa Fe Institute, the Stanford Institute for Theoretical Economics (Summer 1996), UC Berkeley, UC Santa Cruz and UCLA and the University of Copenhagen (especially Mike Akemann, Larry Blume, Sara Castellanos, John Conley, David Cooper, Mike Ryall, Karl Vind, and Federico Weinschelbaum), 3 refer- ees and the editor for many comments that improved both the content and the exposition. We thank the UCLA and UC Berkeley Academic Senate Committees on Research, the National Science Foundation and the Fulbright Foundation for ¯nancial support and the