Core extensions for non-balanced TU-games

Original Paper

Abstract

A family of core extensions for cooperative TU-games is introduced. These solution concepts are non-empty when applied to non-balanced games yet coincide with the core whenever the core is non-empty. The extensions suggest how an exogenous regulator can sustain a stable and efficient outcome, financing a subsidy via individual taxes. Economic and geometric properties of the solution concepts are studied. When taxes are proportional, the proportional prenucleolus is proposed as a single-valued selection device. An application of these concepts to the decentralization of a public goods economy is discussed.

Keywords

Core extensions Efficiency Taxation Public goods 

JEL Classification

C71 H21 H41 

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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.Department of EconomicsRice University MS-22HoustonUSA
  2. 2.Business Administration ProgramUniversity of Washington-BothellBothellUSA

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