Coalitional instability of the distributive Lindahl equilibrium (☆)
Bergstrom  has showed that the Lindahlian approach to the analysis of public goods may also be used to analyze a model of wide-spread externalities in which agents have preferences defined on allocations rather than on individual commodity bundles. He has provided versions of the first and second welfare theorem for a distributive Lindahl equilibrium and also presented sufficient conditions for its existence. However, we shall show that, in contrast to Foley's  result on the core stability of a Lindahl equilibrium, a distributive Lindahl equilibrium need not satisfy coalitional stability. We will provide a robust example in which the unique, distributive Lindahl equilibrium does not belong to the -core defined either as in Scarf  or as in Yannelis .
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Volume (Year): 8 (1996)
Issue (Month): 3 ()
|Note:||Received: December 27, 1994;revised version October 27, 1995|
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