Wireless ad-hoc networks rely on the cooperation of participating nodes for almost all their functions. However, due to resource constraints, nodes are generally selfish and try to maximize their own benefit when participating in the network. Therefore, it is important to study mechanisms which can be used as incentives to form coalitions inside the network. In this paper, we study coalition formation based on game theory, especially cooperative game theory. First, the dynamics of coalition formation proceeds via pairwise bargaining. We show that the size of the maximum coalition is a decreasing function of the cost for establishing a link. After the coalition formation process reaches the steady state, we are interested in the stability of coalitions. We prove that coalitions are stable in terms of both pairwise stability and coalitional stability.