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Core Equivalence in Economies With Satiation

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  • Konovalov, A.

    (Tilburg University, Center for Economic Research)

Abstract

It has long been known that in economies with satiation, the set of competitive equilibria does not coincide with the limiting core of an economy. Competitive equilibria may fail to exist because satiated agents may choose their optimal consumption bundles in the interiors of their budget sets, creating a total budget excess. On the other hand, the core of the economy grows very large. Satiated agents are not interested in entering any coalition; non-satiated agents lack the resources for blocking. In dividend equilibria, introduced independently by a number of authors, the budget excess is allowed to be divided among consumers as dividends and equilibrium existence is restored. In this paper we introduce a new notion of blocking, which leads to core - dividend equilibrium equivalence. It is shown that under a condition of strict monotonicity, both revised and traditional notions of blocking lead to the same fuzzy core.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1998-80.

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Date of creation: 1998
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Handle: RePEc:dgr:kubcen:199880

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Related research

Keywords: satiation; fixed prices; dividend equilibrium; fuzzy core;

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References

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  1. Thomson, William & Zhou, Lin, 1993. "Consistent Solutions in Atomless Economies," Econometrica, Econometric Society, vol. 61(3), pages 575-87, May.
  2. Kajii, Atsushi, 1996. "How to discard non-satiation and free-disposal with paper money," Journal of Mathematical Economics, Elsevier, vol. 25(1), pages 75-84.
  3. Anderson, Robert M., 1992. "The core in perfectly competitive economies," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 14, pages 413-457 Elsevier.
  4. Aumann, Robert J & Dreze, Jacques H, 1986. "Values of Markets with Satiation or Fixed Prices," Econometrica, Econometric Society, vol. 54(6), pages 1271-1318, November.
  5. Dreze, Jacques H. & Muller, Heinz, 1980. "Optimality properties of rationing schemes," Journal of Economic Theory, Elsevier, vol. 23(2), pages 131-149, October.
  6. Nielsen, Lars Tyge, 1994. "Pareto optima in incomplete financial markets," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 87-100, January.
  7. Husseinov, Farhad, 1994. "Interpretation of Aubin's fuzzy coalitions and their extension : Relaxation of finite exchange economics," Journal of Mathematical Economics, Elsevier, vol. 23(5), pages 499-516, September.
  8. Bettina Klaus & Hans Peters & Ton Storcken, 1998. "Strategy-proof division with single-peaked preferences and individual endowments," Social Choice and Welfare, Springer, vol. 15(2), pages 297-311.
  9. Polemarchakis, H. M. & Siconolfi, P., 1993. "Competitive equilibria without free disposal or nonsatiation," Journal of Mathematical Economics, Elsevier, vol. 22(1), pages 85-99.
  10. Makarov, V. L., 1981. "Some results on general assumptions about the existence of economic equilibrium," Journal of Mathematical Economics, Elsevier, vol. 8(1), pages 87-99, March.
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Citations

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Cited by:
  1. Florig, Michael, 2001. "Hierarchic competitive equilibria," Journal of Mathematical Economics, Elsevier, vol. 35(4), pages 515-546, July.
  2. Konovalov, A. & Marakulin, V., 2001. "Equilibria Without the Survival Assumption: A Non-Standard Analysis Approach," Discussion Paper 2001-34, Tilburg University, Center for Economic Research.
  3. Allouch, Nizar & Florenzano, Monique, 2013. "Edgeworth rejective core and dividends equilibria of satiated exchange economies," Journal of Mathematical Economics, Elsevier, vol. 49(1), pages 1-6.
  4. Konovalov, A. & Marakulin, V., 2002. "Generalized equilibrium in an economy without the survival assumption," Econometric Institute Research Papers EI 2002-49, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  5. Jorge Rivera & Michael Florig, 2004. "Indivisible Goods and Fiat Money," Econometric Society 2004 Latin American Meetings 167, Econometric Society.
  6. Nizar Allouch & Monique Florenzano, 2011. "Satiated economies with unbounded consumption sets: fuzzy core and equilibrium," Documents de travail du Centre d'Economie de la Sorbonne 11035, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  7. Nizar Allouch & Monique Florenzano, 2012. "Fuzzy Rejective Core of Satiated Economies with Unbounded Consumption Sets," Working Papers 690, Queen Mary, University of London, School of Economics and Finance.

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