Core and coalition – power in a public good economy

The paper represents a public good economy where any deviating coalition is allowed to impose any tax-system on nonmembers. This institutional environment shows that the core of the public good economy has been reduced though it may be empty. Furthermore, a new core concept is introduced in the paper and its existence and stability properties are examined. The overall conclusion is that there is a trade-off between existence and stability of the core allocations for this type of economies.