Linear Cost Share Equilibria and the Veto Power of the Grand Coalition

Maria Graziano and Maria Romaniello ()
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Maria Romaniello: Seconda Università di Napoli

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We consider pure exchange economies with finitely many private goods involving the choice of a public project. We discuss core-equivalence results in the general framework of non-Euclidean representation of the collective goods. We define a contribution scheme to capture the fraction of the total cost of providing the project that each blocking coalition is expected to cover. We show that for each given contribution scheme defined over the wider class of Aubin coalitions, the resulting core is equivalent to the corresponding linear cost share equilibria. We also characterize linear cost share equilibria in terms of the veto power of the grand coalition. It turns out that linear cost share equilibria are exactly those allocations that cannot be blocked by the grand coalition with reference to auxiliary economies with the same space of agents and modified initial endowments and cost functions. Unlike the Aubin-type equivalence, this characterization does not depend on a particular contribution scheme.

Keywords: Public project; cost share equilibrium; core; non-dominated allocation; grand coalition (search for similar items in EconPapers)
JEL-codes: D51 D60 H41 (search for similar items in EconPapers)
Date: 2010-03-25
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-ppm
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Published in Social Choice and Welfare, 2012, Vol. 38, 269-303

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Journal Article: Linear cost share equilibria and the veto power of the grand coalition (2012)
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