ABSTRACT
The theory of the core treats both cooperation and rivalry. It embraces a wide swath of applications from the outcome of trading in a market to the division of assets among the creditors of a bankrupt. A market can have a Walrasian equilibrium only if it has a core. Hence the existence of a core is necessary for this narrow kind of competitive equilibrium. But core theory applies to much more than transactions among traders. It can also explain the size and distribution of the returns to owners of joint ventures. Competition for workers among joint ventures determines wages. Competition for investors among joint ventures determines the returns to investors. It also applies to situations in which the participants are adversaries. Think of creditors who have claims to the remaining assets of a bankrupt company. Core theory can explain how much each claimant gets. As always, we can avoid being led astray in our theorizing only by having firmly in mind the variety of these applications.
