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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

Related research

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

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  1. Konishi, Hideo & Le Breton, Michel & Weber, Shlomo, 1998. "Equilibrium in a Finite Local Public Goods Economy," Journal of Economic Theory, Elsevier, vol. 79(2), pages 224-244, April.
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  3. Thomas. J. Nechyba, 1997. "Existence of equilibrium and stratification in local and hierarchical Tiebout economies with property taxes and voting," Economic Theory, Springer, vol. 10(2), pages 277-304.
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  5. Nicolas Gravel & Sylvie Thoron, 2003. "Does endogenous formation of jurisdictions lead to wealth stratification?," IDEP Working Papers 0306, Institut d'economie publique (IDEP), Marseille, France.
  6. Hammond, Peter J. & Kaneko, Mamoru & Wooders, Myrna Holtz, 1989. "Continuum economies with finite coalitions: Core, equilibria, and widespread externalities," Journal of Economic Theory, Elsevier, vol. 49(1), pages 113-134, October.
  7. Kovalenkov, Alexander & Wooders, Myrna Holtz, 2002. "Approximate Cores Of Games And Economies With Clubs," The Warwick Economics Research Paper Series (TWERPS) 634, University of Warwick, Department of Economics.
  8. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R Zame, 2003. "Clubs and the Market," Levine's Working Paper Archive 618897000000000754, David K. Levine.
    • Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
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  12. Kaneko, Mamoru & Wooders, Myrna Holtz, 1996. "The Nonemptiness of the f-Core of a Game without Side Payments," International Journal of Game Theory, Springer, vol. 25(2), pages 245-58.
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  16. Conley, John P. & Wooders, Myrna H., 2001. "Tiebout Economies with Differential Genetic Types and Endogenously Chosen Crowding Characteristics," Journal of Economic Theory, Elsevier, vol. 98(2), pages 261-294, June.
  17. Wooders, Myrna, 1980. "The Tiebout Hypothesis: Near Optimality in Local Public Good Economies," Econometrica, Econometric Society, vol. 48(6), pages 1467-85, September.
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  22. Martin Shubik & Myrna Holtz Wooders, 1982. "Near-Markets and Market Games," Cowles Foundation Discussion Papers 657, Cowles Foundation for Research in Economics, Yale University.
  23. Conley, John P. & Wooders, Myrna H., 1997. "Equivalence of the Core and Competitive Equilibrium in a Tiebout Economy with Crowding Types," Journal of Urban Economics, Elsevier, vol. 41(3), pages 421-440, May.
  24. Nizar Allouch & Myrna Wooders, 2004. "Price Taking Equilibrium in Club Economies with Multiple Memberships and Unbounded Club Sizes," Working Papers 513, Queen Mary, University of London, School of Economics and Finance.
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  28. Kaneko, Mamoru & Wooders, Myrna Holtz, 1986. "The core of a game with a continuum of players and finite coalitions: The model and some results," Mathematical Social Sciences, Elsevier, vol. 12(2), pages 105-137, October.
  29. Kaneko, Mamoru & Wooders, Myrna Holtz, 1989. "The core of a continuum economy with widespread externalities and finite coalitions: From finite to continuum economies," Journal of Economic Theory, Elsevier, vol. 49(1), pages 135-168, October.
  30. Berglas, Eitan & Pines, David, 1981. "Clubs, local public goods and transportation models : A synthesis," Journal of Public Economics, Elsevier, vol. 15(2), pages 141-162, April.
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Citations

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Cited by:
  1. Luque, Jaime, 2013. "Heterogeneous Tiebout communities with private production and anonymous crowding," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 117-123.
  2. Myrna Wooders, 2009. "Market Games and Clubs," Vanderbilt University Department of Economics Working Papers 0919, Vanderbilt University Department of Economics.
  3. Hans Gersbach & Hans Haller & Hideo Konishi, 2013. "Household Formation and Markets," Boston College Working Papers in Economics 821, Boston College Department of Economics.
  4. 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.

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