Equilibrium and the Core in Alonso's Discrete Population Model of Land Use

Abstract

Conventional wisdom tells us that with no market failure and local non- satiation of preferences, the core is at least as large as the collection of competitive equilibrium allocations. We confirm this for a standard model featuring land. Next we consider the public land ownership version of the model. If the role of land ownership and rent distribution is assumed by a government that ploughs back rent (at least in excess of its agricultural value) to its citizens, the equilibrium remains efficient, but no longer need be in the core.Publicly Provided Private Goods, Equilibrium, Core