Stability in Generalised Assignment Models : Some Concepts and an Application to Technology Transfer

\Ve consider a generalised assignment model where the payoffs depend on the number of matchings that take place. We define several notions of stability, where these notions differ in the way the agents perceive their payoffs following a deviation. We show that if the agents are very pessimistic regarding their deviation payoffs, then a stable outcome always exists. We then apply these concepts to a model of technology transfer between domestic and foreign firms . We find that if the bargaining power lies completely with the foreign firms, then all the domestic firms lose out as a result of technology transfer. Moreover, the domestic firms that do adopt the new technology may even do worse compared to the domestic firms that do not.