The core of an economy with satiation |
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Authors: | Alexander Konovalov |
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Institution: | (1) Econometric Institute, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, The Netherlands |
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Abstract: | 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. Vasil ev, and anonymous referees for helpful comments and suggestions. |
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Keywords: | Exchange economy Satiation Core equivalence Dividend equilibrium |
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