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A market interpretation of the proportional extended core

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  • Bejan, Camelia
  • Gómez, Juan Camilo

Abstract

Any TU-game can be generated from a production economy with indivisible labor inputs. An equilibrium of that economy always exists after a central intervention that taxes income and subsidizes production. The set of equilibrium allocations corresponding to the smallest income tax coincides with the proportional extended core of the game.

Suggested Citation

  • Bejan, Camelia & Gómez, Juan Camilo, 2012. "A market interpretation of the proportional extended core," Economics Letters, Elsevier, vol. 117(3), pages 636-638.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:636-638
    DOI: 10.1016/j.econlet.2012.08.010
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    References listed on IDEAS

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    1. Sun, Ning & Trockel, Walter & Yang, Zaifu, 2008. "Competitive outcomes and endogenous coalition formation in an n-person game," Journal of Mathematical Economics, Elsevier, vol. 44(7-8), pages 853-860, July.
    2. Shapley, Lloyd S. & Shubik, Martin, 1969. "On market games," Journal of Economic Theory, Elsevier, vol. 1(1), pages 9-25, June.
    3. Billera, Louis J., 1974. "On games without side payments arising from a general class of markets," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 129-139, August.
    4. Garratt, Rod & Qin, Cheng-Zhong, 2000. "On Market Games When Agents Cannot Be in Two Places at Once," Games and Economic Behavior, Elsevier, vol. 31(2), pages 165-173, May.
    5. Garratt, Rod & Qin, Cheng-Zhong, 1997. "On a Market for Coalitions with Indivisible Agents and Lotteries," Journal of Economic Theory, Elsevier, vol. 77(1), pages 81-101, November.
    6. Inoue, Tomoki, 2011. "Representation of TU games by coalition production economies," Center for Mathematical Economics Working Papers 430, Center for Mathematical Economics, Bielefeld University.
    7. Camelia Bejan & Juan Gómez, 2009. "Core extensions for non-balanced TU-games," International Journal of Game Theory, Springer;Game Theory Society, vol. 38(1), pages 3-16, March.
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    Citations

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    Cited by:

    1. Sylvain Béal & André Casajus & Eric Rémila & Philippe Solal, 2021. "Cohesive efficiency in TU-games: axiomatizations of variants of the Shapley value, egalitarian values and their convex combinations," Annals of Operations Research, Springer, vol. 302(1), pages 23-47, July.
    2. Camelia Bejan & Juan Camilo Gómez, 2018. "Equal treatment without large numbers," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(4), pages 1239-1259, November.

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    More about this item

    Keywords

    Core extensions; Market games; Taxes and subsidies;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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