THE CORE OF A SPATIAL PRICE EQUILIBRIUM GAME*

ABSTRACT This paper presents a critical appraisal of the use of the core as a solution concept for games involving spatially separated producers. Starting from the classical Samuelson/Takayama-Judge spatial price equilibrium model, the core of a game between the producers of commodities in this economy is defined, the conditions ensuring the nonemptiness of the core are stated, and the problems surrounding the definition and computation of the characteristic function are addressed. An application to the eastern United States’coal market is then presented in order to illustrate the usefulness of the theoretical and algorithmic results of this paper.