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A Core Selection for Regulating a Single-Output Monopoly

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  • Herve J. Moulin

Abstract

We consider a single-output production economy in which all coalitions of agents have access to the technology. Under increasing returns to scale, the corresponding cooperative game (without side payments) is convex, and hence has a large core. We propose a core selection that is obtained by considering the lowest price of output relative to input such that the corresponding vector of indirect utilities is feasible. The constant returns equivalent allocation is feasible and achieves this utility vector. It satisfied the property of technological monotonicity: when the production possibility set expands, no agent faces a utility loss. Technological monotonicity and the core property together characterize the constant returns equivalent solution.

Suggested Citation

  • Herve J. Moulin, 1987. "A Core Selection for Regulating a Single-Output Monopoly," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 397-407, Autumn.
    • Handle: RePEc:rje:randje:v:18:y:1987:i:autumn:p:397-407
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    Cited by:

    1. Xu, Yongsheng & Yoshihara, Naoki, 2019. "Does dynamic market competition with technological innovation leave no one behind?," Discussion Paper Series 699, Institute of Economic Research, Hitotsubashi University.
    2. Xu, Yongsheng & Yoshihara, Naoki, 2019. "Efficiency Invites Divide and Coercion in the Age of Increasing Returns to Scale," Discussion Paper Series 700, Institute of Economic Research, Hitotsubashi University.
    3. Thomson, William, 1997. "The Replacement Principle in Economies with Single-Peaked Preferences," Journal of Economic Theory, Elsevier, vol. 76(1), pages 145-168, September.
    4. Arguedas, Carmen & Kranich, Laurence, 2006. "The linear cost equivalent rule: A solution procedure for heterogeneous joint production problems," Mathematical Social Sciences, Elsevier, vol. 51(1), pages 70-80, January.
    5. Chambers, Christopher P. & Hayashi, Takashi, 2020. "Can everyone benefit from innovation?," Journal of Mathematical Economics, Elsevier, vol. 88(C), pages 187-191.
    6. Bag, Parimal Kanti & Winter, Eyal, 1999. "Simple Subscription Mechanisms for Excludable Public Goods," Journal of Economic Theory, Elsevier, vol. 87(1), pages 72-94, July.
    7. Arguedas, Carmen & Kranich, Laurence, 1997. "Allocating environmental costs among heterogeneous sources: The linear damage equivalent mechanism," UC3M Working papers. Economics 6042, Universidad Carlos III de Madrid. Departamento de Economía.

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