IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Announcement or Contribution? The Relative Efficiency of Manipulated Lindahl Mechanisms

  • Nigar Hashimzade

    (University of Reading)

  • Gareth Myles

    (Department of Economics, University of Exeter)

The private provision mechanism is individually incentive compatible but inefficient. The Lindahl mechanism is efficient but not incentive compatible. We analyze the outcome of the manipulated Lindahl mechanism. When the demand announcements of participants are unrestricted the Lindahl mechanism suffers from multiple equilibria. If the government removes the multiplicity by restricting the functional form of announcements the resulting Lindahl equilibrium can be made approximately efficient. Approximate efficiency is achieved by announcements that are one-dimensional regardless of the number of participants in the mechanism. This is in contrast to mechanisms that achieve exact efficiency but require announcements whose dimensionality increases at the same rate as the number of participants. The mechanism we describe benefits from simplicity at the cost of approximate efficiency. We demonstrate that mechanisms in which a linear demand function is announced are supermodular so play will converge to the Nash equilibrium for a range of learning dynamics.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Exeter University, Department of Economics in its series Discussion Papers with number 0812.

in new window

Date of creation: 2008
Date of revision:
Handle: RePEc:exe:wpaper:0812
Contact details of provider: Postal: Streatham Court, Rennes Drive, Exeter EX4 4PU
Phone: (01392) 263218
Fax: (01392) 263242
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:exe:wpaper:0812. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlos Cortinhas)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.