No externalities: a characterization of efficiency and incentive compatibility with public goods
AbstractWe show that efficient anonymous incentive compatible (dominant strategy) mechanisms for public goods eliminate externalities, i.e., each individual is unable to change the welfare of anyone else. The characterization is used to derive existence and non-existence results for models with a finite number of individuals and to explain existence results in the continuum. A similar characterization and conclusions are demonstrated for private goods in (J Econ Theory 85:169–225, 1999 ). However, unlike private goods, elimination of externalities with public goods implies that individuals cannot change the outcome. Hence, such mechanisms provide only weak incentives for truth-telling. Copyright Springer-Verlag 2012
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.
Bibliographic InfoArticle provided by Springer in its journal Social Choice and Welfare.
Volume (Year): 39 (2012)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/00355/index.htm
Other versions of this item:
- Joseph M. Ostroy & Uzi Segal, 2010. "No Externalities: A Characterization of Efficiency and Incentive Compatibility with Public Goods," Boston College Working Papers in Economics 769, Boston College Department of Economics.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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.:
- Makowski, Louis & Ostroy, Joseph M., 1992.
"Vickrey-Clarke-Groves mechanisms in continuum economies : Characterization and existence,"
Journal of Mathematical Economics,
Elsevier, vol. 21(1), pages 1-35.
- Louis Makowski & Joseph M. Ostroy, 1990. "Vickrey-Clarke-Groves Mechanisms in Continuum Economies: Characterization and Existence," UCLA Economics Working Papers 607, UCLA Department of Economics.
- Eric Maskin, 1998.
"Nash Equilibrium and Welfare Optimality,"
Harvard Institute of Economic Research Working Papers
1829, Harvard - Institute of Economic Research.
- Walker, Mark, 1980. "On the Nonexistence of a Dominant Strategy Mechanism for Making Optimal Public Decisions," Econometrica, Econometric Society, vol. 48(6), pages 1521-40, September.
- Rob, Rafael, 1982. "Asymptotic efficiency of the demand revealing mechanism," Journal of Economic Theory, Elsevier, vol. 28(2), pages 207-220, December.
- Philippe Jehiel & Moritz Meyer-ter-Vehn & Benny Moldovanu & William R. Zame, 2005.
"The Limits of Ex-Post Implementation,"
666156000000000548, UCLA Department of Economics.
- Theodore Groves & Martin Loeb, 1974.
"Incentives and Public Inputs,"
29, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Shigehiro Serizawa, 1999. "Strategy-Proof and Symmetric Social Choice Functions for Public Good Economies," Econometrica, Econometric Society, vol. 67(1), pages 121-146, January.
- Schummer, James, 2000.
"Manipulation through Bribes,"
Journal of Economic Theory,
Elsevier, vol. 91(2), pages 180-198, April.
- William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
- Hammond, Peter J, 1979. "Straightforward Individual Incentive Compatibility in Large Economies," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 263-82, April.
- H. Moulin, 1980. "On strategy-proofness and single peakedness," Public Choice, Springer, vol. 35(4), pages 437-455, January.
- Makowski, Louis & Ostroy, Joseph M. & Segal, Uzi, 1999. "Efficient Incentive Compatible Economies Are Perfectly Competitive," Journal of Economic Theory, Elsevier, vol. 85(2), pages 169-225, April.
- Makowski, Louis & Ostroy, Joseph M., 2013. "From revealed preference to preference revelation," Journal of Mathematical Economics, Elsevier, vol. 49(1), pages 71-81.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.