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Coalitional Instability of the Distributive Lindahl Equilibrium

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  • Asdrubali, Pierfederico

Abstract

Bergstron has shown that the Lindahlian approach to the analysis of public goods may also be used to analyze a model of widespread externalities in which agents have preferences defined on allocations rather than on individual commodity bundles. He has provided versions of the first and second welfare theorem for a distributive Lindahl equilibrium and also presented sufficient conditions for its existence. However, we shall show that, in contrast to Foley's result on the core stability of a Lindahl equilibrium, a distributive Lindahl equilibrium need not satisfy coalitional stability. We will provide a robust example in which the unique, distributive Lindahl equilibrium does not belong to the alpha-core defined either as in Scarf or as in Yannelis.

Suggested Citation

  • Asdrubali, Pierfederico, 1996. "Coalitional Instability of the Distributive Lindahl Equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(3), pages 565-575, October.
  • Handle: RePEc:spr:joecth:v:8:y:1996:i:3:p:565-75
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    Cited by:

    1. Christian Pietro & Maria Gabriella Graziano & Vincenzo Platino, 2022. "Social loss with respect to the core of an economy with externalities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(2), pages 487-508, April.

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