Core (economics)

A core is the set of feasible allocations in an economy that cannot be improved upon by subset of the set of the economy's consumers (a coalition). A coalition is said to improve upon or block a feasible allocation if the members of that coalition are better off under a different feasible allocation that is identical to the first except that every member of the coalition has a different consumption bundle that is part of an aggregate consumption bundle that can be constructed from publicly available technology and the initial endowments of each consumer in the coalition.

An allocation is said to have have the core property if there is no coalition that can improve upon it. The core is the set of all feasible allocations with the core property.

Every Walrasian equilibrium has the core property, but not vice versa. However, as the number of consumers in the economy tends to infinity, the core tends to a set of Walrasian equilibria.