Equilibrium and the Core in Alonso's Discrete Population Model of Land Use
Conventional wisdom tells us that with no market failure and local non- satiation of preferences, the core is at least as large as the collection of competitive equilibrium allocations. We confirm this for a standard model featuring land. Next we consider the public land ownership version of the model. If the role of land ownership and rent distribution is assumed by a government that ploughs back rent (at least in excess of its agricultural value) to its citizens, the equilibrium remains efficient, but no longer need be in the core.
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RCER Working Papers
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"Urban Economic Theory,"
Cambridge University Press, number 9780521396455, November.
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