The veto power of the grand coalition in economies with consumption externalities

Maria Gabriella Graziano; Marialaura Pesce; Vincenzo Platino

doi:10.3934/jdg.2024021

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2025, Volume 12, Issue 4: 359-381. Doi: 10.3934/jdg.2024021

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The veto power of the grand coalition in economies with consumption externalities

1.
Dipartimento di Scienze Economiche e Statistiche, Università di Napoli Federico II, Italy
2.
Centre for Studies in Economics and Finance (CSEF), Italy

^*Corresponding author: Maria Gabriella Graziano
^*Corresponding author: Maria Gabriella Graziano

Dedicated to Professor Carlos Herv´es-Beloso on the occasion of his 70th birthday

Received: July 2024

Early access: September 14, 2024

Published online: September 14, 2024

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Abstract

The goal of this paper is to provide some new cooperative characterizations of competitive equilibria in pure exchange economies with consumption externalities. In this framework, several notions of equilibrium supported by prices are possible. The central notion analyzed in the paper is the one of $ A $-equilibrium in which individual preferences are affected by consumption externalities in a very broad sense. Indeed, each individual $ i $ takes into account in her preferences the consumption of a group of agents $ A_ i $ exogenously given. Following [16,17,19], we show that the veto power of the grand coalition is enough to characterize $ A $-equilibria despite the presence of externalities and provide applications in connection with strategic market games. Our results, for suitable choices of the sets $ A_ i $, imply characterizations of Walras-Nash, Berge, total and family equilibria of pure exchange economies with externalities.

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Mathematics Subject Classification: Primary: 91B24, 91B50; Secondary: 91A05, 91A86.

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