COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 752 "Mass-Economics with Vital Small Coalitions; the F-Core Approach" Peter J. Hammond, P. Kane and Myrna Holtz Wooders May 1985 A mass-economy is one with many, many agents where each agent is negligible and each
trading group is also negligible with respect to the mass-economy. Feasible allocations
are those which are virtually attainable by trades only among members of coalitions
contained in feasible ("measure-consistent") partitions of the agent set. A
feasible allocation is in the core, called the f-core, if it cannot be improved
upon by any finite coalition. We show that in a private goods economy with
indivisibilities and without externalities, the f-core, the A-core
(Aumann’s core concept) and the Walrasian allocations coincide. In the presence of
widespread externalities, the f-core and the Walrasian allocations coincide but
the definition of the A-core is problematic. The conceptual significance of these
results will be discussed. |
