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Anonymous price taking equilibrium in Tiebout economies with a continuum of agents: Existence and characterization

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  • Allouch, Nizar
  • Conley, John P.
  • Wooders, Myrna

Abstract

We introduce a model of a local public goods economy with a continuum of agents and jurisdictions with finite but unbounded populations, where the set of possible projects for each jurisdiction/club is unrestricted in size. Under boundedness of per capita payoffs, which simply ensures that equal treatment payoffs are bounded above, we apply results of Kaneko and Wooders (1986) to obtain nonemptiness of the core of the economy. We then demonstrate, under the stronger condition of strict small group effectiveness, that the equal treatment core coincides with the set of price-taking equilibrium outcomes with anonymous prices--that is, prices for public goods depend only on observable characteristics of agents. Existence of equilibrium follows from nonemptiness of the core and equivalence of the core to the set of equilibrium outcomes. Our approach provides a new technique for showing existence of equilibrium in economies with a continuum of agents.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 45 (2009)
Issue (Month): 9-10 (September)
Pages: 492-510

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Handle: RePEc:eee:mateco:v:45:y:2009:i:9-10:p:492-510

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Web page: http://www.elsevier.com/locate/jmateco

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Keywords: Tiebout Jurisdictions f-core Core-equilibrium equivalence Edgeworth equivalence Continuum economies Crowding types Core Equal treatment core Large games;

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Citations

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Cited by:
  1. Hans Gersbach & Hans Haller & Hideo Konishi, 2013. "Household Formation and Markets," CESifo Working Paper Series, CESifo Group Munich 4414, CESifo Group Munich.
  2. Konishi, Hideo, 2013. "Entrepreneurial land developers: Joint production, local externalities, and mixed housing developments," Journal of Urban Economics, Elsevier, vol. 75(C), pages 68-79.
  3. Wooders, Myrna, 2008. "Market games and clubs," MPRA Paper 33968, University Library of Munich, Germany, revised Dec 2010.
  4. Luque, Jaime, 2013. "Heterogeneous Tiebout communities with private production and anonymous crowding," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(1), pages 117-123.
  5. Jaime Luque, 2014. "Wages, local amenities and the rise of the multi-skilled city," The Annals of Regional Science, Springer, Springer, vol. 52(2), pages 457-467, March.

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