A Measure of Social Loss for Production Economies with Externalities

Maria Graziano and Vincenzo Platino

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

Abstract: In this paper we consider a production economy and adopt a cooperative approach to equilibrium analysis which allows each individual to cooperate with others and to form a coalition whose members have access to the available technologies. Our definition of the core requires a blocking coalition to take account of the consequences of its blocking for the production of the counter-coalition. Following Montesano (2002), we introduce a measure of social loss with respect to the core of the economy which characterizes the corresponding core allocations. Our characterization holds in the presence of consumption externalities and an optimistic attitude of coalition agents with respect to the behavior of outsiders.

Keywords: production economy; core; social loss; externalities. (search for similar items in EconPapers)
JEL-codes: C71 D11 D21 D62 D64 (search for similar items in EconPapers)
Date: 2022-07-13
New Economics Papers: this item is included in nep-gth
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Journal Article: A measure of social loss for production economies with externalities (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:649

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