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Envy-free allocation of indivisible goods with money and externalities

Author

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  • Satoshi Nakada

    (Graduate School of Economics, Hitotsubashi University)

Abstract

This paper considers an envy-free allocation of a single indivisible good in the quasi-linear utility environment where a monetary transfer is allowed and externalities among agents exist. We show that an envy-free allocation does not exist if a degree of the externalities is high enough and there are two groups of agents: one group of agents can but the other group of agents cannot enjoy externalities. We also show that both efficient allocations and envy-free allocations are generally incompatible whereas they are always compatible without externalities.

Suggested Citation

  • Satoshi Nakada, 2018. "Envy-free allocation of indivisible goods with money and externalities," Economics Bulletin, AccessEcon, vol. 38(1), pages 52-59.
    • Handle: RePEc:ebl:ecbull:eb-17-00267
    as

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    References listed on IDEAS

    as
    1. Yuji Fujinaka & Toyotaka Sakai, 2009. "The positive consequence of strategic manipulation in indivisible good allocation," International Journal of Game Theory, Springer;Game Theory Society, vol. 38(3), pages 325-348, November.
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    4. Thomson, William, 1990. "On the non existence of envy-free and egalitarian-equivalent allocations in economies with indivisibilities," Economics Letters, Elsevier, vol. 34(3), pages 227-229, November.
    5. Velez, Rodrigo A., 2016. "Fairness and externalities," Theoretical Economics, Econometric Society, vol. 11(1), January.
    6. Koichi Tadenuma, 1996. "Trade-off between equity and efficiency in a general economy with indivisible goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(4), pages 445-450.
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    Cited by:

    1. Obara Takuya & Tsugawa Shuichi, 2019. "Public Good Provision Financed by Nonlinear Income Tax Under Reduction of Envy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-16, October.

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    More about this item

    Keywords

    envy-free allocation; indivisible goods; network; externality;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics

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