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Maximizing social welfare in congestion games via redistribution

Listed author(s):
  • Victor Naroditskiy
  • Richard Steinberg
Registered author(s):

    It is well-known that efficient use of congestible resources can be achieved via marginal pricing; however, payments collected from the agents generate a budget surplus, which reduces social welfare. We show that an asymptotically first-best solution in the number of agents can be achieved by the appropriate redistribution of the budget surplus back to the agents.

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    File URL: http://eprints.lse.ac.uk/62771/
    File Function: Open access version.
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    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 62771.

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    Date of creation: 2015
    Publication status: Published in Games and Economic Behavior, 2015, 93, pp. 24-41. ISSN: 0899-8256
    Handle: RePEc:ehl:lserod:62771
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    1. 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.
    2. Patrick Maillé & Nicolás E. Stier-Moses, 2009. "Eliciting Coordination with Rebates," Transportation Science, INFORMS, vol. 43(4), pages 473-492, November.
    3. Holmstrom, Bengt, 1979. "Groves' Scheme on Restricted Domains," Econometrica, Econometric Society, vol. 47(5), pages 1137-1144, September.
    4. Moulin, Hervé, 2009. "Almost budget-balanced VCG mechanisms to assign multiple objects," Journal of Economic Theory, Elsevier, vol. 144(1), pages 96-119, January.
    5. Adler, Jeffrey L. & Cetin, Mecit, 2001. "A direct redistribution model of congestion pricing," Transportation Research Part B: Methodological, Elsevier, vol. 35(5), pages 447-460, June.
    6. Bailey, Martin J, 1997. "The Demand Revealing Process: To Distribute the Surplus," Public Choice, Springer, vol. 91(2), pages 107-126, April.
    7. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-260, May.
    8. Guo, Mingyu & Conitzer, Vincent, 2009. "Worst-case optimal redistribution of VCG payments in multi-unit auctions," Games and Economic Behavior, Elsevier, vol. 67(1), pages 69-98, September.
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