The core of an economy with satiation

Summary. It has long been known that in economies with satiation, the set of competitive equilibria does not coincide with the limiting core of an economy. In dividend equilibria, introduced independently by a number of authors, the budget excess is allowed to be divided among consumers as dividends and equilibrium existence is restored. In this paper a new notion of blocking which leads to core - dividend equilibrium equivalence is introduced. Specifically, it is shown that an allocation is a dividend equilibrium if and only if a corresponding equal treatment allocation of a large economy is in the core.Received: 21 June 2003, Revised: 3 December 2003, JEL Classification Numbers: D50.Alexander Konovalov: The author would like to thank M. Florig, P. J. J. Herings, V. Marakulin, D. Talman, V. Vasilev, and anonymous referees for helpful comments and suggestions.