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Choosing and Sharing

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  • Jérémy Laurent-Lucchetti
  • Justin Leroux

    ()
    (IEA, HEC Montréal)

Abstract

Choosing a project for which benefits accrue to all involved agents but brings major costs or additional benefits to only one agent is often problematic. Siting a nationwide nuclear waste disposal or hosting a major sporting event are examples of such a problem: costs or benefits are tied to the identity of the host of the project. Our goals are twofold: to choose the efficient site (the host with the lowest cost or the highest localized surplus) and to share the cost, or surplus, in a predetermined way so as to achieve redistributive goals. We propose a simple mechanism to implement both objectives. The unique subgame-perfect Nash equilibrium of our mechanism coincides with truthtelling, is efficient, budget-balanced and immune to coalitional deviations.

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Bibliographic Info

Paper provided by HEC Montréal, Institut d'économie appliquée in its series Cahiers de recherche with number 07-13.

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Length: 24 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:iea:carech:0713

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References

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  1. Perry, M. & Reny, P.J., 1995. "A General Solution to King Solomon's Dilemma," Papers, Tilburg - Center for Economic Research 9581, Tilburg - Center for Economic Research.
  2. Peleg, Bezalel, 1978. "Consistent Voting Systems," Econometrica, Econometric Society, Econometric Society, vol. 46(1), pages 153-61, January.
  3. Moulin, Herve, 2002. "Axiomatic cost and surplus sharing," Handbook of Social Choice and Welfare, Elsevier, in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 6, pages 289-357 Elsevier.
  4. Jérémy Laurent-Lucchetti & Justin Leroux, 2007. "Choosing and Sharing," Cahiers de recherche, HEC Montréal, Institut d'économie appliquée 07-13, HEC Montréal, Institut d'économie appliquée.
  5. Lars Ehlers, 2009. "Choosing wisely: the natural multi-bidding mechanism," Economic Theory, Springer, Springer, vol. 39(3), pages 505-512, June.
  6. Mailath, George J & Postlewaite, Andrew, 1990. "Asymmetric Information Bargaining Problems with Many Agents," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 351-67, July.
  7. Jeremy Laurent-lucchetti & Justin Leroux, 2010. "Lindahl prices solve the NIMBY problem," Economics Bulletin, AccessEcon, vol. 30(3), pages 2457-2463.
  8. Minehart, Deborah & Neeman, Zvika, 2002. "Effective Siting of Waste Treatment Facilities," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 303-324, March.
  9. Perez-Castrillo, David & Veszteg, Robert F., 2007. "Choosing a common project: Experimental evidence on the multibidding mechanism," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 63(3), pages 394-411, July.
  10. O'Sullivan Arthur, 1993. "Voluntary Auctions for Noxious Facilities: Incentives to Participate and the Efficiency of Siting Decisions," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages S12-S26, July.
  11. Frey, Bruno S & Oberholzer-Gee, Felix & Eichenberger, Reiner, 1996. "The Old Lady Visits Your Backyard: A Tale of Morals and Markets," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 104(6), pages 1297-1313, December.
  12. David P�rez-Castrillo & David Wettstein, 2002. "Choosing Wisely: A Multibidding Approach," American Economic Review, American Economic Association, American Economic Association, vol. 92(5), pages 1577-1587, December.
  13. Hervé Moulin, 2010. "Auctioning or assigning an object: some remarkable VCG mechanisms," Social Choice and Welfare, Springer, Springer, vol. 34(2), pages 193-216, February.
  14. Kunreuther, Howard & Kleindorfer, Paul R, 1986. "A Sealed-Bid Auction Mechanism for Siting Noxious Facilities," American Economic Review, American Economic Association, American Economic Association, vol. 76(2), pages 295-99, May.
  15. Matthew O. Jackson, 2001. "A crash course in implementation theory," Social Choice and Welfare, Springer, Springer, vol. 18(4), pages 655-708.
  16. Douglas Easterling, 1992. "Fair rules for siting a high-level nuclear waste repository," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 11(3), pages 442-475.
  17. Róbert Veszteg, 2010. "Multibidding game under uncertainty," Review of Economic Design, Springer, Springer, vol. 14(3), pages 311-329, September.
  18. Eric Maskin, 1998. "Nash Equilibrium and Welfare Optimality," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1829, Harvard - Institute of Economic Research.
  19. Laurent-Lucchetti, Jérémy & Leroux, Justin, 2009. "Axiomatic foundation for Lindahl pricing in the NIMBY context," MPRA Paper 14930, University Library of Munich, Germany.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Sharing NIMBY
    by Economic Logician in Economic Logic on 2009-05-14 02:34:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Laurent-Lucchetti, Jérémy & Leroux, Justin, 2009. "Axiomatic foundation for Lindahl pricing in the NIMBY context," MPRA Paper 14930, University Library of Munich, Germany.
  2. Pérez-Castrillo, David & Quérou, Nicolas, 2012. "Smooth multibidding mechanisms," Games and Economic Behavior, Elsevier, Elsevier, vol. 76(2), pages 420-438.
  3. Jeremy Laurent-lucchetti & Justin Leroux, 2010. "Lindahl prices solve the NIMBY problem," Economics Bulletin, AccessEcon, vol. 30(3), pages 2457-2463.
  4. Laurent-Lucchetti, Jérémy & Leroux, Justin, 2009. "Choosing and Sharing," MPRA Paper 14929, University Library of Munich, Germany.
  5. Duygu Yengin, 2013. "Identical Preferences Lower Bound for Allocation of Heterogenous Tasks and NIMBY Problems," Journal of Public Economic Theory, Association for Public Economic Theory, Association for Public Economic Theory, vol. 15(4), pages 580-601, 08.
  6. Roberta Occhilupo & Giuliana Palumbo & Paolo Sestito, 2011. "Siting public facilities: a theoretical and empirical analysis of the Nimby syndrome in Italy," Questioni di Economia e Finanza (Occasional Papers), Bank of Italy, Economic Research and International Relations Area 91, Bank of Italy, Economic Research and International Relations Area.

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