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Social Loss with Respect to the Core of an Economy with Externalities

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Abstract

We consider a pure exchange economy with externalities. We adopt a cooperative approach to equilibrium analysis, allowing each individual to cooperate with others and to form coalitions. Individual preferences are affected by the consumption of all other agents in the economy, and the consumption set of each agent is affected by the coalition to which he/she belongs. Following Montesano (2002), we introduce a measure of social loss with respect to the gamma-core and alpha-core of the economy which completely characterizes the corresponding core allocations.

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  • Christian Di Pietro & Maria Gabriella Graziano & Vincenzo Platino, 2019. "Social Loss with Respect to the Core of an Economy with Externalities," CSEF Working Papers 538, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 29 Aug 2019.
  • Handle: RePEc:sef:csefwp:538
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    References listed on IDEAS

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    1. Graziano, Maria Gabriella & Meo, Claudia & Yannelis, Nicholas C., 2017. "Stable sets for exchange economies with interdependent preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 267-286.
    2. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    3. del Mercato, Elena L., 2006. "Existence of competitive equilibria with externalities: A differential viewpoint," Journal of Mathematical Economics, Elsevier, vol. 42(4-5), pages 525-543, August.
    4. Jean-Marc Bonnisseau & Elena Mercato, 2010. "Externalities, consumption constraints and regular economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(1), pages 123-147, July.
    5. Bonnisseau, Jean-Marc & del Mercato, Elena L., 2008. "General consumption constraints and regular economies," Journal of Mathematical Economics, Elsevier, vol. 44(12), pages 1286-1301, December.
    6. Elena L. del Mercato, 2006. "The core of a coalitional exchange economy," Cahiers de la Maison des Sciences Economiques b06047, Université Panthéon-Sorbonne (Paris 1).
    7. Velez, Rodrigo A., 2016. "Fairness and externalities," Theoretical Economics, Econometric Society, vol. 11(1), January.
    8. Ichiishi, Tatsuro, 1981. "A Social Coalitional Equilibrium Existence Lemma," Econometrica, Econometric Society, vol. 49(2), pages 369-377, March.
    9. Jean-Jacques Laffont, 1988. "Fundamentals of Public Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121271.
    10. Aldo Montesano, 2002. "Social loss with respect to the core of an economy," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 19(4), pages 763-767.
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    Cited by:

    1. Maria Gabriella Graziano & Claudia Meo & Nicholas C. Yannelis, 2021. "Core and Stable Sets of Exchange Economies with Externalities," CSEF Working Papers 617, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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    More about this item

    Keywords

    exchange economy; interdependent preferences; core; social loss;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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