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
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Bibliographic InfoArticle provided by Springer in its journal Social Choice and Welfare.
Volume (Year): 39 (2012)
Issue (Month): 4 (October)
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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
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- Makowski, Louis & Ostroy, Joseph M., 2013. "From revealed preference to preference revelation," Journal of Mathematical Economics, Elsevier, vol. 49(1), pages 71-81.
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