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A Core Equilibrium Convergence in a Public Goods Economy

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  • Allouch, N.

Abstract

This paper shows a core-equilibrium convergence in a public goods economy where consumers' preferences display warm glow effects. We demonstrate that if each consumer becomes satiated to other consumers' provision, then as the economy grows large the core shrinks to the set of Edgeworth allocations. Moreover, we show that an Edgeworth allocation can be decentralized as a warm glow equilibrium.

Suggested Citation

  • Allouch, N., 2010. "A Core Equilibrium Convergence in a Public Goods Economy," Cambridge Working Papers in Economics 1022, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1022
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    References listed on IDEAS

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    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Allouch, Nizar & Wooders, Myrna, 2008. "Price taking equilibrium in economies with multiple memberships in clubs and unbounded club sizes," Journal of Economic Theory, Elsevier, vol. 140(1), pages 246-278, May.
    3. Wolfgang Buchholz & Wolfgang Peters, 2007. "The Edgeworth Conjecture in a Public Goods Economy: An Elementary Example," Economics Bulletin, AccessEcon, vol. 8(6), pages 1-4.
    4. Nizar Allouch, 2013. "A competitive equilibrium for a warm-glow economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 269-282, May.
    5. Champsaur, Paul & Roberts, Donald John & Rosenthal, Robert W, 1975. "On Cores in Economies with Public Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 751-764, October.
    6. MONIQUE FLORENZANO & ELENA L. del MERCATO, 2006. "Edgeworth and Lindahl-Foley equilibria of a General Equilibrium Model with Private Provision of Pure Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(5), pages 713-740, December.
    7. Allouch, Nizar & Conley, John P. & Wooders, Myrna, 2009. "Anonymous price taking equilibrium in Tiebout economies with a continuum of agents: Existence and characterization," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 492-510, September.
    8. Conley John P., 1994. "Convergence Theorems on the Core of a Public Goods Economy: Sufficient Conditions," Journal of Economic Theory, Elsevier, vol. 62(1), pages 161-185, February.
    9. Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, vol. 5(3), pages 419-477, December.
    10. Foley, Duncan K, 1970. "Lindahl's Solution and the Core of an Economy with Public Goods," Econometrica, Econometric Society, vol. 38(1), pages 66-72, January.
    11. Muench, Thomas J., 1972. "The core and the Lindahl equilibrium of an economy with a public good: an example," Journal of Economic Theory, Elsevier, vol. 4(2), pages 241-255, April.
    12. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    13. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    14. repec:hal:journl:halshs-00085726 is not listed on IDEAS
    15. Roberts, Donald John, 1974. "The Lindahl solution for economies with public goods," Journal of Public Economics, Elsevier, vol. 3(1), pages 23-42, February.
    16. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-598, September.
    17. Wooders, Myrna Holtz, 1983. "The epsilon core of a large replica game," Journal of Mathematical Economics, Elsevier, vol. 11(3), pages 277-300, July.
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    Citations

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    Cited by:

    1. Nizar Allouch, 2013. "A competitive equilibrium for a warm-glow economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 269-282, May.
    2. Wolfgang Buchholz & Alexander Haupt & Wolfgang Peters, 2016. "Equity as a Prerequisite for Stability of Cooperation on Global Public Good Provision," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 61-78, September.
    3. Jiuqiang Liu & Xiaodong Liu, 2014. "Existence of Edgeworth and competitive equilibria and fuzzy cores in coalition production economies," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(4), pages 975-990, November.

    More about this item

    Keywords

    competitive equilibrium; warm glow; public goods; Edgeworth; core; decentralization;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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