Approximate Cores of a General Class of Economies. Part I: Replica Games, Externalities, and Approximate Cores

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Discussion Paper

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Sufficient conditions are demonstrated for the non-emptiness of asymptotic cores of sequences of replica games, i.e., for all sufficiently large replications, the games have non-empty approximate cores and the approximation can be made arbitrarily “good”. The conditions are simply that the games are superadditive and satisfy a very non-restrictive “per-capita” boundedness assumption (these properties are satisfied by games derived from well-known models of replica economies). It is argued that the results can be applied to a broad class of games derived from economic models, including ones with external economies and diseconomies, indivisibilities and non-convexities. To support this claim, in Part I applications to an economy with local public goods are provided and in Part II, to a general model of a coalition production economy with remarkably few restrictions on production technology sets and with (possibly) indivisibilities in consumption. Additional examples in Part I illustrate the generality of the result.

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