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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- E. Maskin, 1983. "The Theory of Implementation in Nash Equilibrium: A Survey," Working papers 333, Massachusetts Institute of Technology (MIT), Department of Economics.
- repec:cep:stitep:/1991/235 is not listed on IDEAS
- Schmeidler, David & Vind, Karl, 1972.
"Fair Net Trades,"
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- Schweizer,Urs, 1989. "Calculus of consent: A game-theoretic perspective," Discussion Paper Serie A 234, University of Bonn, Germany.
- Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
- Theodore Groves, 1979. "Efficient Collective Choice when Compensation is Possible," Review of Economic Studies, Oxford University Press, vol. 46(2), pages 227-241.
- Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, March.
- 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.
- Baumol, William J, 1972. "On Taxation and the Control of Externalities," American Economic Review, American Economic Association, vol. 62(3), pages 307-22, June.
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