A Coase Theorem Based on a New Concept of theCore

The core is reformulated to incorporate the externality typical in strategic formgames. Any coalition of players may deviate by trying to commit to a profile of actionsdifferent from a status quo. The outsiders of the coalition may take a coordinatedmeasure, incentive-feasibly for themselves, to preempt the coalition’s commitment. If acoalition succeeds in committing to its action profile, the outsiders’ reactions constitutea core solution among themselves. A core solution is robust against the deviations ofcoalitions which expect such preemptive and reactive responses from the other players.In an externality problem where pollution is the dominant action, the core is nonempty.In any two-player strategic form game, the core is also nonempty.[...]