Anonymous Price Taking Equilibrium in Tiebout Economies with a Continuum of Agents: Existence and Characterization
John Conley () and
Myrna Wooders ()
No 811, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics
We introduce a model of a local public goods economy with a continuum of agents and jurisdictions with finite, but unbounded populations, where the set of possible projects for each jurisdiction/club is unrestricted in size. Under boundedness of per capita payoffs, which simply ensures that equal treatment payoffs are bounded above, we apply results of Kaneko and Wooders (1986) to obtain nonemptiness of the core of the economy. We then demonstrate, under the stronger condition of strict small group effectiveness, that the equal treatment core coincides with the set of price-taking equilibrium outcomes with anonymous prices -- that is, prices for public goods depend only on observable characteristics of agents. Existence of equilibrium follows from nonemptiness of the core and equivalence of the core to the set of equilibrium outcomes. Our approach provides a new technique for showing existence of equilibrium in economies with a continuum of agents.
Keywords: Tiebout; jurisdictions; f-core; core-equilibrium equivalence; Edgeworth equivalence; continuum economies; crowding types; core; equal treatment core; large games (search for similar items in EconPapers)
JEL-codes: C7 D5 H4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
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http://www.accessecon.com/pubs/VUECON/vu08-w11.pdf First version, 2008 (application/pdf)
Journal Article: Anonymous price taking equilibrium in Tiebout economies with a continuum of agents: Existence and characterization (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:0811
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