Negative Externalities and Evolutionary Implementation
AbstractWe model externality abatement as an implementation problem. A social planner would like to ensure efficient behaviour among a group of agents whose actions are sources of externalities. However, the planner has limited information about the agents' preferences, and is unable to distinguish individual agents except through their action choices. We prove that if a concavity condition on aggregate payoffs is satisfied, the planner can guarantee that efficient behaviour is globally stable under a wide range of behaviour adjustment processes by administering a variable pricing scheme. Through a series of applications, we show that the concavity condition is naturally satisfied in settings involving negative externalities. We conclude by contrasting the performance of the pricing mechanism with that of a mechanism based on direct revelation and announcement dependent forcing contracts. Copyright 2005, Wiley-Blackwell.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Oxford University Press in its journal The Review of Economic Studies.
Volume (Year): 72 (2005)
Issue (Month): 3 ()
Contact details of provider:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Sandholm, William H., 2010. "Decompositions and potentials for normal form games," Games and Economic Behavior, Elsevier, Elsevier, vol. 70(2), pages 446-456, November.
- Meng, Dawen & Tian, Guoqiang, 2013. "Entry-Deterring Nonlinear Pricing with Bounded Rationality," MPRA Paper 57935, University Library of Munich, Germany, revised May 2014.
- Hofbauer, Josef & Sandholm, William H., 2007.
"Evolution in games with randomly disturbed payoffs,"
Journal of Economic Theory, Elsevier,
Elsevier, vol. 132(1), pages 47-69, January.
- Hofbauer,J. & Sandholm,W.H., 2003. "Evolution in games with randomly disturbed payoffs," Working papers, Wisconsin Madison - Social Systems 20, Wisconsin Madison - Social Systems.
- Hofbauer, Josef & Sandholm, William H., 2009. "Stable games and their dynamics," Journal of Economic Theory, Elsevier, Elsevier, vol. 144(4), pages 1665-1693.e, July.
- Norovsambuu Tumennasan, 2011.
"To Err is Human: Implementation in Quantal Response Equilibria,"
Economics Working Papers, School of Economics and Management, University of Aarhus
2011-11, School of Economics and Management, University of Aarhus.
- Tumennasan, Norovsambuu, 2013. "To err is human: Implementation in quantal response equilibria," Games and Economic Behavior, Elsevier, Elsevier, vol. 77(1), pages 138-152.
- Fosgerau, Mogens & Karlström, Anders, 2007.
"The value of reliability,"
5733, University Library of Munich, Germany.
- Fosgerau, Mogens & Karlström, Anders, 2010. "The value of reliability," Transportation Research Part B: Methodological, Elsevier, Elsevier, vol. 44(1), pages 38-49, January.
- Hirofumi Yamamura & Ryo Kawasaki, 2013. "Generalized average rules as stable Nash mechanisms to implement generalized median rules," Social Choice and Welfare, Springer, Springer, vol. 40(3), pages 815-832, March.
- Fujishima, Shota, 2013. "Evolutionary implementation of optimal city size distributions," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(2), pages 404-410.
- Alfredo Garcia & Mingyi Hong & Jorge Barrera, 2012. "“Cap and Trade” for Congestion Control," Dynamic Games and Applications, Springer, Springer, vol. 2(3), pages 280-293, September.
- Sandholm, William H., 2007. "Pigouvian pricing and stochastic evolutionary implementation," Journal of Economic Theory, Elsevier, Elsevier, vol. 132(1), pages 367-382, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.