Coase, competition, and compensation
I show that the Pigovian solution to a simple externalities problem and a particular Coasian solution can be viewed as competitive equilibria from different initial endowments. I also describe the ``compensation mechanism,'' a mechanism that implements either the Coasian or Pigovian solution as the outcome of an economically natural bargaining game.
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References listed on IDEAS
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- SCHMEIDLER, David & VIND, Karl, .
"Fair net trades,"
CORE Discussion Papers RP
131, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- repec:cep:stitep:/1991/235 is not listed on IDEAS
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- Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
- L. Hurwicz, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," Review of Economic Studies, Oxford University Press, vol. 46(2), pages 217-225.
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