Linear Cost Share Equilibria and the Veto Power of the Grand Coalition
AbstractWe consider pure exchange economies with finitely many private goods involving the choice of a public project. We discuss core-equivalence results in the general framework of non-Euclidean representation of the collective goods. We define a contribution scheme to capture the fraction of the total cost of providing the project that each blocking coalition is expected to cover. We show that for each given contribution scheme defined over the wider class of Aubin coalitions, the resulting core is equivalent to the corresponding linear cost share equilibria. We also characterize linear cost share equilibria in terms of the veto power of the grand coalition. It turns out that linear cost share equilibria are exactly those allocations that cannot be blocked by the grand coalition with reference to auxiliary economies with the same space of agents and modified initial endowments and cost functions. Unlike the Aubin-type equivalence, this characterization does not depend on a particular contribution scheme.
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Bibliographic InfoPaper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 248.
Date of creation: 25 Mar 2010
Date of revision:
Publication status: published in Social Choice and Welfare, 2012, Vol. 38, 269-303
Public project; cost share equilibrium; core; non-dominated allocation; grand coalition;
Other versions of this item:
- Maria Graziano & Maria Romaniello, 2012. "Linear cost share equilibria and the veto power of the grand coalition," Social Choice and Welfare, Springer, vol. 38(2), pages 269-303, February.
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- D60 - Microeconomics - - Welfare Economics - - - General
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-11 (All new papers)
- NEP-CDM-2010-04-11 (Collective Decision-Making)
- NEP-GTH-2010-04-11 (Game Theory)
- NEP-PPM-2010-04-11 (Project, Program & Portfolio Management)
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