Coalitional instability of the distributive Lindahl equilibrium (☆)

Pierfederico Asdrubali

Economic Theory, 1996, vol. 8, issue 3, 565-575

Abstract: Bergstrom [3] has showed that the Lindahlian approach to the analysis of public goods may also be used to analyze a model of wide-spread externalities in which agents have preferences defined on allocations rather than on individual commodity bundles. He has provided versions of the first and second welfare theorem for a distributive Lindahl equilibrium and also presented sufficient conditions for its existence. However, we shall show that, in contrast to Foley's [4] result on the core stability of a Lindahl equilibrium, a distributive Lindahl equilibrium need not satisfy coalitional stability. We will provide a robust example in which the unique, distributive Lindahl equilibrium does not belong to the -core defined either as in Scarf [11] or as in Yannelis [12].

JEL-codes: D51 D62 D64 (search for similar items in EconPapers)
Date: 1996
Note: Received: December 27, 1994;revised version October 27, 1995
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