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A Clarke tax tâtonnement that converges to the Lindahl allocation

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Abstract

This paper uses the Clarke mechanism to construct an incentive compatible t âtonnement process which converges to the Lindahl allocation of a stylized public good economy when consumers have quadratic preferences. We show truth-telling to be an ex-post perfect equilibrium in the infinite horizon game induced by the tâtonnement. Copyright Springer-Verlag Berlin Heidelberg 2014

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  • Matt Essen, 2014. "A Clarke tax tâtonnement that converges to the Lindahl allocation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(2), pages 309-327, August.
  • Handle: RePEc:spr:sochwe:v:43:y:2014:i:2:p:309-327 DOI: 10.1007/s00355-013-0781-8
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    References listed on IDEAS

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    1. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
    2. Rob, Rafael, 1982. "Asymptotic efficiency of the demand revealing mechanism," Journal of Economic Theory, Elsevier, vol. 28(2), pages 207-220, December.
    3. Walker, Mark, 1980. "On the Nonexistence of a Dominant Strategy Mechanism for Making Optimal Public Decisions," Econometrica, Econometric Society, vol. 48(6), pages 1521-1540, September.
    4. Van Essen, Matthew & Lazzati, Natalia & Walker, Mark, 2012. "Out-of-equilibrium performance of three Lindahl mechanisms: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 74(1), pages 366-381.
    5. Matt Van Essen, 2012. "A note on the stability of Chen’s Lindahl mechanism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(2), pages 365-370, February.
    6. Pivato, Marcus, 2011. "A fair pivotal mechanism for nonpecuniary public goods," MPRA Paper 34525, University Library of Munich, Germany.
    7. Foley, Duncan K, 1970. "Lindahl's Solution and the Core of an Economy with Public Goods," Econometrica, Econometric Society, vol. 38(1), pages 66-72, January.
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    9. Healy, Paul J. & Mathevet, Laurent, 2012. "Designing stable mechanisms for economic environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
    10. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    11. Van Essen, Matthew J., 2008. "A Simple Supermodular Mechanism that Implements Lindahl Allocations," MPRA Paper 12781, University Library of Munich, Germany.
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    13. Tideman, T Nicolaus & Tullock, Gordon, 1976. "A New and Superior Process for Making Social Choices," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1145-1159, December.
    14. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, December.
    15. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, January.
    16. Matt Van Essen, 2012. "Information complexity, punishment, and stability in two Nash efficient Lindahl mechanisms," Review of Economic Design, Springer;Society for Economic Design, vol. 16(1), pages 15-40, March.
    17. Finsinger, Jorg & Vogelsang, Ingo, 1981. "Alternative Institutional Frameworks for Price Incentive Mechanism," Kyklos, Wiley Blackwell, vol. 34(3), pages 388-404.
    18. Matthew J. Essen, 2013. "A Simple Supermodular Mechanism that Implements Lindahl Allocations," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(3), pages 363-377, June.
    19. Sinn, Hans-Werner, 1986. "Sufficient conditions for a vanishing Clarke tax - a note," Munich Reprints in Economics 19878, University of Munich, Department of Economics.
    20. Kim, Taesung, 1993. "A stable Nash mechanism implementing Lindahl allocations for quasi-linear environments," Journal of Mathematical Economics, Elsevier, vol. 22(4), pages 359-371.
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    More about this item

    Keywords

    C72; D44; H41;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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