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The Unique Informational Effciency of the Lindahl Allocation Process in Economies with Public Goods

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  • Tian, Guoqiang

Abstract

This paper investigates the informational requirements of resource allocation processes in public goods economies with any number of firms and commodities. We show that the Lindahl mechanism is informationally effcient in the sense that it uses the smallest message space among smooth resource allocation processes that are informationally decentralized and realize Pareto optimal allocations over the class of public goods economies where Lindahl equilibria exist. Furthermore, we show that the Lindahl mechanism is the unique informationally effcient decentralized mechanism that realizes Pareto effcient and individually rational allocations in public goods economies with Cobb-Douglas utility functions and quadratic production functions.

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File URL: http://mpra.ub.uni-muenchen.de/41229/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41229.

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Date of creation: 2001
Date of revision: Oct 2005
Handle: RePEc:pra:mprapa:41229

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Keywords: Informational Effciency; Lindahl Allocation Process; Public Goods;

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References

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  1. Mount, Kenneth & Reiter, Stanley, 1974. "The informational size of message spaces," Journal of Economic Theory, Elsevier, Elsevier, vol. 8(2), pages 161-192, June.
  2. Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, Elsevier, vol. 5(3), pages 419-477, December.
  3. Hurwicz, Leonid, 1979. "On allocations attainable through Nash equilibria," Journal of Economic Theory, Elsevier, Elsevier, vol. 21(1), pages 140-165, August.
  4. Xavier Calsamiglia & Alan Kirman, 1991. "A unique informationally efficient and decentralized mechanism with fair outcomes," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 7, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Tian, Guoqiang, 1990. "Completely feasible and continuous implementation of the Lindahl correspondence with a message space of minimal dimension," Journal of Economic Theory, Elsevier, Elsevier, vol. 51(2), pages 443-452, August.
  6. Sato, Fumitaka, 1981. "On the informational size of message spaces for resource allocation processes in economies with public goods," Journal of Economic Theory, Elsevier, Elsevier, vol. 24(1), pages 48-69, February.
  7. Calsamiglia, Xavier, 1977. "Decentralized resource allocation and increasing returns," Journal of Economic Theory, Elsevier, Elsevier, vol. 14(2), pages 263-283, April.
  8. Stefan Reichelstein & Stanley Reiter, 1985. "Game Forms with Minimal Strategy Spaces," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 663, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Walker, Mark, 1977. "On the informational size of message spaces," Journal of Economic Theory, Elsevier, Elsevier, vol. 15(2), pages 366-375, August.
  10. Hurwicz, Leonid, 1999. " Revisiting Externalities," Journal of Public Economic Theory, Association for Public Economic Theory, Association for Public Economic Theory, vol. 1(2), pages 225-45.
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