1. A central region in an economy, with good communications and high population density, which are conducive to its prosperity. The core is surrounded by the periphery: outlying regions, usually with poorer communications and sparse population. At the world level, core countries are characterized by higher levelopment and higher accessibility, in terms of transportation and trade, relative to the periphery.
2. The set of feasible allocations that cannot be improved upon by a coalition formed by a subset of the consumers in an economy. A coalition can improve upon an allocation if there is some reallocation of the resources within the coalition such that a new allocation is obtained that is at least as good as the old for all coalition members and strictly preferred for some. In an Edgeworth box the core of the economy is the set of Pareto-efficient allocations that are preferred by all consumers to the initial endowment point. The ‘core convergence theorem’ proves that the core of the economy shrinks to the set of competitive equilibria as the number of consumers in the economy increases. The concept of the core can also be applied to cooperative games.
|Reference: Oxford Press Dictonary of Economics, 5th edt.|