The strong sequential core for two-period economies

The strong sequential core for two-stage economies with a possibly incomplete set of assets in period zero and trade in commodities in period one consists of those goods allocations that are in the classical core and moreover, after realization of the state of nature, in the core of the economy where executed asset contracts serve as initial endowments. The strong sequential core coincides with the classical core when all possible state-contingent contracts may serve as an asset. For finance economies it is shown that the strong sequential core is generically empty when there is an incomplete set of assets. Outside the setting of finance economies, we show that the strong sequential core can be empty even if there is a complete set of assets. If the set of constrained feasible allocations resulting from trading in assets, is enlarged to include also allocations outside the agents' consumption sets, then a complete set of assets is sufficient for the equivalence of the resulting semi-strong sequential core and the classical core. (C) 2002 Elsevier Science B.V. All rights reserved.