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A Simple Auction Mechanism for the Optimal Allocation of the Commons Author info | Abstract | Publisher info | Download info | Related research | Statistics Juan-Pablo Montero
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Efficient regulation of the commons requires information about the regulated firms that is rarely available to regulators (e.g., cost of pollution abatement). This paper proposes a simple mechanism that implements the first-best for any number of firms: a uniform price, sealed-bid auction of an endogenous number of (transferable) licenses with a fraction of the auction revenues given back to firms. Paybacks, which rapidly decrease with the number of firms, are such that truth-telling is a dominant strategy regardless of whether firms behave non-cooperatively or collusively. The mechanism also provides firms with incentives to invest in socially optimal R&D. (JEL D44, L51, Q21)
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Article provided by American Economic Association in its journal American Economic Review .
Volume (Year): 98 (2008)
Issue (Month): 1 (March)
Pages: 496-518
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Handle: RePEc:aea:aecrev:v:98:y:2008:i:1:p:496-518Contact details of provider: Email: Web page: http://www.aeaweb.org/aer/ More information through EDIRC
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Other versions:
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Juan Pablo Montero, 2007.
"An Auction Mechanism for the Commons: Some Extensions ,"
Cuadernos de Economía (Latin American Journal of Economics) ,
Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 44(130), pages 141-150.
[Downloadable!]
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