Coalition and Core in Resource Allocation and Exchange

Abstract

In discrete exchange economies with possibly redundant and joint ownership, the conventional strong core may be empty, while the weak core may include unintuitive outcomes. We propose new core notions in the conventional flavor by regarding endowments as rights to consume or trade with others. Our key idea is to identify self-enforcing coalitions and to redistribute their redundant property rights. Our first notion lies between the strong core and the weak core and is independent of Balbuzanov and Kotowski's (2019a) exclusion core. Our second notion refines the first and the exclusion core by combining their different merits. We generalize the You Request My House -I Get Your Turn mechanism to find our core allocations.