Template-Type: ReDIF-Paper 1.0
Title: An Equivalence Result for the Core of an Economy with a Public Good
Author-Name: Shlomo Weber
Author-Name: Hans Wiesmeth
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Keywords: Microeconomic theory, Fiscal theory
Abstract: The central result of this paper is a refinement of an 
 equivalence theorem in Mas-Colell (1980) for the core of a 
 finite economy with a public good. It is shown that an 
 allocation belongs to the core if and only if it is a cost 
 share equilibrium. A further characterization of core 
 elements which can be supported by a strictly monotonic cost 
 sharing method is also provided. An application of these 
 results allows a complete characterization of core 
 allocations which can be supported by a linear cost share 
 system. The set of linear cost share equilibria, which are 
 in one-to-one correspondence with the Lindahl-Foley 
 equilibria, is determined by uniform upper and lower bounds 
 on the elasticity of substitution for the public good. In 
 contrast to cost share equilibria, Lindahl-Foley equilibria 
 are based on profit maximization.
Series: Sonderforschungsbereich 303, University of Bonn, Germany

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Creation-Date: 1990-02
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Handle: RePEc:bon:bonsfa:282