Core equivalence with large agents

TL;DR

This paper investigates the relationship between core and competitive equilibria in economies with many small agents and some large agents, showing that these allocations may not always align.

Contribution

It constructs a class of economies where the core and competitive allocations differ, highlighting limitations of their equivalence.

Findings

Core and competitive allocations can diverge in economies with large agents.

The paper provides explicit examples where core and competitive solutions do not coincide.

Abstract

This paper studies the relationship between core and competitive equilibira in economies that consist of a continuum of agents and some large agents. We construct a class of these economies in which the core and competitive allocations do not coincide.