Equivalence of Lindahl equilibrium with participation prices and the core

Summary

In a model of an economy with multiple public goods and differentiated crowding, it is shown that asymptotically the core has the equal treatment property and coincides with the equilibrium outcomes. It follows that all individuals of the same type in the same jurisdiction must pay the same Lindahl taxes and, with strict convexity of preferences, the same Lindahl prices. With only one private good, for sufficiently large economies we show (a) the equivalence of the core and the set of equilibrium outcomes and (b) the nonemptiness of approximate cores and their equivalence to the set of approximate equilibrium outcomes.

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The author is indebted to Vicky Barham, John Conley, Hideo Konishi, Julian Manning and Roma Jakiwczyk for comments on an earlier draft of this paper. The author gratefully acknowledges the research support of the Social Sciences and Humanities Research Council of Canada.

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Wooders, M.H. Equivalence of Lindahl equilibrium with participation prices and the core. Econ Theory 9, 115–127 (1997). https://doi.org/10.1007/BF01213446

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Keywords

  • Public Good
  • Economic Theory
  • Equilibrium Outcome
  • Equal Treatment
  • Private Good