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Core equivalence in economies with satiation

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Author Info
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 anumber 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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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 80.

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

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D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. 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. [Downloadable!] (restricted)
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  2. 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. [Downloadable!] (restricted)
  3. Thomson, William & Zhou, Lin, 1993. "Consistent Solutions in Atomless Economies," Econometrica, Econometric Society, vol. 61(3), pages 575-87, May. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
  5. 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. [Downloadable!] (restricted)
  6. 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. [Downloadable!] (restricted)
  7. Nielsen, Lars Tyge, 1994. "Pareto optima in incomplete financial markets," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 87-100, January. [Downloadable!] (restricted)
  8. Dreze, Jacques H. & Muller, Heinz, 1980. "Optimality properties of rationing schemes," Journal of Economic Theory, Elsevier, vol. 23(2), pages 131-149, October. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jorge Rivera & Michael Florig, 2004. "Indivisible Goods and Fiat Money," Econometric Society 2004 Latin American Meetings 167, Econometric Society. [Downloadable!]
  2. Konovalov, A. & Marakulin, V., 2001. "Equilibria without the survival assumption : a non-standard analysis approach," Discussion Paper 34, Tilburg University, Center for Economic Research. [Downloadable!]
  3. A. Konovalov & V. Marakulin, 2002. "Generalized equilibrium in an economy without the survival assumption," Econometric Institute Report 297, Erasmus University Rotterdam, Econometric Institute. [Downloadable!]
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