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A Price-Quantity Mechanism to Implement Lindahl Allocations with Forthrightness

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  • Sébastien Rouillon

Abstract

We provide a new price-quantity mechanism to implement the Lindahl allocations as Nash equilibria. We show that it satisfies the property of forthrightness, introduced by Saijo et al. [1996]. Thus, at a Nash equilibrium, each player reports directly and honestly his personal price and his demand for the public good and obtains the corresponding commodity bundle. Using the gradient process to formalize the behaviour of the players out-of-equilibrium, we show that, in quasi-linear economies, the Nash equilibrium of the game is globally stable.

Suggested Citation

  • Sébastien Rouillon, 2011. "A Price-Quantity Mechanism to Implement Lindahl Allocations with Forthrightness," Revue d'économie politique, Dalloz, vol. 121(5), pages 751-766.
  • Handle: RePEc:cai:repdal:redp_215_0751
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    Keywords

    Lindahl equilibrium; economic mechanism;

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