Core Equivalence in Economies With Satiation

It has long been known that in economies with satiation, the set of competitive equilibria does not coincide with the limiting core of an economy. Competitive equilibria may fail to exist because satiated agents may choose their optimal consumption bundles in the interiors of their budget sets, creating a total budget excess. On the other hand, the core of the economy grows very large. Satiated agents are not interested in entering any coalition; non-satiated agents lack the resources for blocking. In dividend equilibria, introduced independently by a number of authors, the budget excess is allowed to be divided among consumers as dividends and equilibrium existence is restored. In this paper we introduce a new notion of blocking, which leads to core - dividend equilibrium equivalence. It is shown that under a condition of strict monotonicity, both revised and traditional notions of blocking lead to the same fuzzy core.