Parkash Chander

A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution

For a simple economic model of transfrontier pollution, widely used in theoretical studies of international treaties bearing on joint abatement, we offer in this paper a scheme for sharing national abatement costs through international financial transfers that is inspired by a classical solution concept from the theory of cooperative games—namely, the core of a game. The scheme has the following properties: total damage and abatement costs in all countries are minimized (optimality property), and no coalition or subset of countries can achieve lower total costs for its members by taking another course of action in terms of emissions or transfers, under some reasonable assumption about the reactions of those not in the coalition (core property). In the concluding section economic interpretations of the scheme are proposed, including its connection with the free-riding problem.

The gamma-core and coalition formation

This paper reinterprets the γ-core (Chander and Tulkens in Int Tax Pub Financ 2:279–293, 1995; in Int J Game Theory 26:379–401, 1997) and justifies it as well as its prediction that the efficient coalition structure is stable in terms of the coalition formation theory. The problem of coalition formation is formulated as an infinitely repeated game in which the players must choose whether to cooperate or not. It is shown that a certain equilibrium of this game corresponds to the γ-core assumption that when a coalition forms the remaining players form singletons, and that the grand coalition is an equilibrium coalition structure.

The optimal product mix for a monopolist in the presence of congestion effects. A model and some results

The paper develops a model of product differentiation in which the quality of a product may be negatively affected by the number of consumers buying it, as it is the case for any good affected by congestion. It is shown that for any positive degree of heterogeneity among the consumers, a monopolist will always find it more profitable to differentiate, i.e., to sell more than one quality of the product at different prices.

The Kyoto Protocol and Developing Countries: Strategy and Equity Issues

This paper interprets the Kyoto Protocol in terms of game theory with special emphasis on its implications for developing countries. What should be the role and strategy of these countries, especially India, in its implementation and future negotiations?

Repetitive Risk Aversion

This paper introduces and investigates the concept of repetitive risk aversion. The risk aversion of an increasing and concave utility function is repetitive if the fear of ruin, which measures agents aversion to risking his entire income, is also increasing and concave. This is shown to be equivalent to the behaviorally meaningful condition that the risk premium is increasing at a non-increasing rate with the size of the bet. We find an additional justification for mixed risk aversion, which is known to be stronger than standard (and thus proper) risk aversion, in terms of this concept. We discuss several economic applications of repetitive risk aversion.

The Gamma-Core and Coalition Formation

This paper reinterprets by [gamma]-core (Chander and Tulkens (1995, 1997)) and justifies it as well as its prediction that the efficient coalition structure is stable in terms of the coalition formation theory. It is assumed that coalitions can freely merge or break apart, are farsighted (that is, it is the final and not the immediate payoffs that matter to the coalitions)and a coalition may deviate if and only if it stands to gain from it. It is then shown that subsequent to a deviation by a coalition, the nonmembers will have incentives to break apart into singletons, as is assumed in the definition of the [gamma]-characteristic function, and that the grand coalition is the only stable coalition structure.

Exchange processes, the core and competitive allocations

The purpose of this paper is to propose a decentralized resource allocation process for a pure exchange economy that converges from the initial endowments to an allocation in the core of the economy. Being conceived of in a typically non-Walrasian but instead Marshallian spirit, it is inspired from various nontâtonnement, planning and other such processes, for none of which a core convergence property has ever been established. After describing our “exchange process” in Section 2, we introduce in Section 3 the notion of “replicable exchange process” and we prove that any process which is replicable and converges to the core must converge to a competitive allocation. In Section 4 we observe that our exchange process is replicable. We then show that, with the prices it involves, it converges to a competitive equilibrium, hence to an allocation in the core, for the class of economies with quasi-linear utility functions. This restriction is commented upon in the concluding Section 5

Subsidy Reforms and Poverty Alleviation

This paper presents a general framework for characterizing the optimal pattern of subsidies for poverty alleviation under budgetary constraints and suggests possible reforms for the existing pattern of subsidies. The government may subsidize or tax goods in order to meet its objectives. The paper introduces the concept of a consumer equilibrium and shows that there are cases of equilibria in which reforms can generate not only fiscal savings but also Pareto improve the welfare of both poor and wealthy consumers.