An economic approach to social choice — II

There is a formal equivalence between games, societies, and economies. Lindahl equilibrium for a game or society corresponds to competitive equilibrium for the equivalent economy. Results on existence and optimality of competitive equilibrium thus apply to the theory of games and societies. The “core” for a game or society as derived by extension from the core of an economy is “too large” to be interesting. An example illustrates that the α-core may be disjoint from the set of Lindahl equilibria. However, if the power of coalitions to inflict negative externalities is suitably restricted, Lindahl equilibria must be in the α-core.