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Mechanism Design for the Environment

Author

Listed:
  • Sandeep Baliga

    () (Kellogg Graduate School of Management, Northwestern University)

  • Eric Maskin

    () (School of Social Science, Institute for Advanced Study)

Abstract

We argue that when externalities such as pollution are nonexcludable, agents must be compelled to participate in a "mechanism" to ensure a Pareto-efficient outcome. We survey some of the main findings of the mechanism-design (implementation-theory) literature -- such as the Nash implementation theorem, the Gibbard-Satterthwaite theorem, the Vickrey-Clarke-Groves mechanism, and the Arrow/d'Aspremont-Gerard-Varet mechanism -- and consider their implications for the environment, in particular the reduction of aggregate emissions of pollution. We consider the cases of both complete and incomplete information.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Sandeep Baliga & Eric Maskin, 2002. "Mechanism Design for the Environment," Economics Working Papers 0024, Institute for Advanced Study, School of Social Science.
  • Handle: RePEc:ads:wpaper:0024
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    References listed on IDEAS

    as
    1. Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
    2. Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, vol. 45(2), pages 427-438, March.
    3. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
    4. Maskin, Eric & Sjostrom, Tomas, 2002. "Implementation theory," Handbook of Social Choice and Welfare,in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 5, pages 237-288 Elsevier.
    5. Partha Dasgupta & Peter Hammond & Eric Maskin, 1980. "On Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Oxford University Press, vol. 47(5), pages 857-860.
    6. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 23-38.
    7. E. Maskin, 1983. "The Theory of Implementation in Nash Equilibrium: A Survey," Working papers 333, Massachusetts Institute of Technology (MIT), Department of Economics.
    8. Maskin, Eric S, 1994. "The Invisible Hand and Externalities," American Economic Review, American Economic Association, vol. 84(2), pages 333-337, May.
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    Citations

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    Cited by:

    1. Axel Ockenfels, 2009. "Marktdesign und Experimentelle Wirtschaftsforschung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(s1), pages 31-53, May.
    2. Committee, Nobel Prize, 2007. "Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson: Mechanism Design Theory," Nobel Prize in Economics documents 2007-2, Nobel Prize Committee.
    3. Raffensperger, John F., 2011. "Matching users' rights to available groundwater," Ecological Economics, Elsevier, vol. 70(6), pages 1041-1050, April.
    4. repec:wly:iecrev:v:58:y:2017:i::p:751-782 is not listed on IDEAS
    5. Rodrigo Harrison & Roger Lagunoff, 2017. "Dynamic Mechanism Design For A Global Commons," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58, pages 751-782, August.
    6. Denis Claude & Charles Figuières & Mabel Tidball, 2012. "Regulation of Investments in Infrastructure: The Interplay between Strategic Behaviors and Initial Endowments," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(1), pages 35-66, February.
    7. Carlos Chávez & John Stranlund, 2009. "A Note on Emissions Taxes and Incomplete Information," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(1), pages 137-144, September.
    8. Prasenjit Banerjee & Jason F. Shogren, 2013. "Climate Change: Risk, Reputation, and Mechanism Design," The School of Economics Discussion Paper Series 1303, Economics, The University of Manchester.
    9. Jason Shogren & Gregory Parkhurst & Prasenjit Banerjee, 2010. "Two Cheers and a Qualm for Behavioral Environmental Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(2), pages 235-247, June.
    10. Herve Moulin & Indrajit Ray & Sonali Sen Gupta, 2013. "Coarse Correlated Equilibria in an Abatement Game," Discussion Papers 13-11, Department of Economics, University of Birmingham.
    11. Banerjee, Prasenjit & Shogren, Jason F., 2010. "Regulation, reputation, and environmental risk," Economics Letters, Elsevier, vol. 106(1), pages 45-47, January.
    12. Rupayan Pal & Prasenjit Banerjee & Ada Wossink, 2017. "Going Green To Be Seen: The Case of Biodiversity Protection on Farmland," The School of Economics Discussion Paper Series 1701, Economics, The University of Manchester.
    13. Eric S. Maskin, 2008. "Mechanism Design: How to Implement Social Goals," American Economic Review, American Economic Association, vol. 98(3), pages 567-576, June.
    14. Banerjee, Prasenjit & Shogren, Jason F., 2012. "Fat-tail Climate Risks, Mechanism design, and Reputation," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124920, Agricultural and Applied Economics Association.
    15. Matveenko, V., 2010. "Stimulating Mechanisms in Ecologically Motivated Regulation: Will Ecological Policies in Transition and Developing Countries Become Efficient?," Journal of the New Economic Association, New Economic Association, issue 8, pages 10-34.
    16. Qin, Botao & Shogren, Jason F., 2015. "Social norms, regulation, and environmental risk," Economics Letters, Elsevier, vol. 129(C), pages 22-24.
    17. Banerjee, Prasenjit & Shogren, Jason F., 2012. "Material interests, moral reputation, and crowding out species protection on private land," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 137-149.

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    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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