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Maximal surplus from the pivotal mechanism: a closed form solution


  • Rajat Deb

    () (Department of Economics, Southern Methodist University, Dallas, Tx 75275, USA)

  • Tae Kun Seo

    () (Department of Economics, Southern Methodist University, Dallas, Tx 75275, USA)


The paper derives a closed form solution for the maximal surplus generated by the pivotal mechanism in the case of a binary public good. The formula may be used to compare the pivotal mechanism to other mechanisms. An illustration is provided to demonstrate how such a comparison may be made.

Suggested Citation

  • Rajat Deb & Tae Kun Seo, 1998. "Maximal surplus from the pivotal mechanism: a closed form solution," Review of Economic Design, Springer;Society for Economic Design, vol. 3(4), pages 347-357.
  • Handle: RePEc:spr:reecde:v:3:y:1998:i:4:p:347-357 Note: Received: 30 April 1997 / Accepted: 16 June 1998

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    References listed on IDEAS

    1. Romano, Richard E., 1988. "Oligopolistic competition for market share via voluntary excess supply," International Journal of Industrial Organization, Elsevier, vol. 6(4), pages 447-468.
    2. Watts, Alison, 1996. "On the Uniqueness of Equilibrium in Cournot Oligopoly and Other Games," Games and Economic Behavior, Elsevier, vol. 13(2), pages 269-285, April.
    3. Moulin Herve & Shenker Scott, 1994. "Average Cost Pricing versus Serial Cost Sharing: An Axiomatic Comparison," Journal of Economic Theory, Elsevier, vol. 64(1), pages 178-201, October.
    4. Kitch, Edmund W, 1977. "The Nature and Function of the Patent System," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 265-290, October.
    5. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
    6. Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-1037, September.
    7. Roemer, J.E., 1988. "On Public Ownership," Papers 317, California Davis - Institute of Governmental Affairs.
    8. Martin Shubik, 1962. "Incentives, Decentralized Control, the Assignment of Joint Costs and Internal Pricing," Management Science, INFORMS, vol. 8(3), pages 325-343, April.
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    Cited by:

    1. Shao, Ran & Zhou, Lin, 2016. "Voting and optimal provision of a public good," Journal of Public Economics, Elsevier, vol. 134(C), pages 35-41.
    2. Moulin, Hervé, 2009. "Almost budget-balanced VCG mechanisms to assign multiple objects," Journal of Economic Theory, Elsevier, vol. 144(1), pages 96-119, January.
    3. Yi, Jianxin & Li, Yong, 2016. "A general impossibility theorem and its application to individual rights," Mathematical Social Sciences, Elsevier, vol. 81(C), pages 79-86.
    4. You, Jung S., 2015. "Optimal VCG mechanisms to assign multiple bads," Games and Economic Behavior, Elsevier, vol. 92(C), pages 166-190.

    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation


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