Correlated Equilibrium and the Pricing of Public Goods
AbstractLindahl equilibrium is an application of price-taking behavior to achieve efficiency in the allocation of public goods. Such an equilibrium requires individuals to be strategically naive, i.e., Lindahl equilibrium is not incentive compatible. Correlated equilibrium is defined precisely to take account of strategic behavior and incentive compatibility. Using the duality theory of linear programming, we show that these two seemingly disparate notions can be combined to give a public goods, Lindahl pricing characterization of efficient correlated equilibria. We also show that monopoly theory can be used to characterize inefficient correlated equilibria.
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Bibliographic InfoPaper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 616.
Date of creation: 07 Sep 2006
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
Other versions of this item:
- NEP-ALL-2006-09-16 (All new papers)
- NEP-KNM-2006-09-16 (Knowledge Management & Knowledge Economy)
- NEP-MIC-2006-09-16 (Microeconomics)
- NEP-PBE-2006-09-16 (Public Economics)
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