Linear cost sharing in economies with non-Samuelsonian public goods: Core equivalence

We consider an economy with non-Samuelsonian public goods and we focus on linear cost sharing. In a linear cost sharing equilibrium all agents in the economy optimize given a certain fixed cost share to be contributed towards the provision of public goods in the economy. Hence, each agent pays a cer...

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Bibliographic Details
Published in:Social choice and welfare 1998-01, Vol.15 (1), p.121-139
Main Authors: Gilles, Robert P., Diamantaras, Dimitrios
Format: Article
Language:English
Subjects:
Cost allocation
Cost functions
Costs
Economic agents
Economic costs
Economic Systems
Economic theory
Private goods
Public economics
Public Goods
Resource Allocation
Sharing
Sharing economy
Social Equilibrium
Utility functions
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Summary:We consider an economy with non-Samuelsonian public goods and we focus on linear cost sharing. In a linear cost sharing equilibrium all agents in the economy optimize given a certain fixed cost share to be contributed towards the provision of public goods in the economy. Hence, each agent pays a certain fraction of the total establishment costs of public goods and these cost shares are common knowledge. We show that for a certain fixed contribution scheme the resulting linear cost share equilibria are equivalent to corresponding core allocations, in which the core is based on the integral of the individual cost shares. We also show that there is no equivalence of the Foley core with cost share equilibria, even in well-behaved large economies.
ISSN:0176-1714
1432-217X