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.
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We wish to thank the editor, a referee, an anonymous reviewer, Beth Allen, Marc Dudey, Yakar Kannai, Herve Moulin, Marcel Richter, Luis Sánchez-Mier, and the participants in the Microeconomic Theory Workshop at Rice University for their helpful comments.
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Bejan, C., Gómez, J.C. Core extensions for non-balanced TU-games. Int J Game Theory 38, 3–16 (2009). https://doi.org/10.1007/s00182-008-0135-4
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DOI: https://doi.org/10.1007/s00182-008-0135-4