THE CORE COINCIDES WITH THE NUCLEOLUS ALLOCATIONS IN A PUBLIC GOODS ECONOMY WITH TAXATION

We study a public goods economy with a certain tax system to finance public goods provision. Each coalition is allowed to tax the complementary coalition when proposing a new allocation. Taxation is regulated by a public authority so as to satisfy certain restriction on the resulting allocation. We show that the core coincides with the set of nucleolus allocations defined in this economy. We also show that the core is nonempty under the usual convexity assumptions.