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On Sharing the Benefits of Communication

Author

Listed:
  • Efthymios Athanasiou

    (Dep. of Philosophy, CMU)

  • Santanu Dey

    (ISYE, Georgia Tech)

  • Giacomo Valleta

    (Dep. of Economics, Maastricht)

Abstract

We put forward a model of private goods with externalities. Agents derive benefit from communicating with each other. In order to communicate they need to have a language in common. Learning languages is costly. In this setting no individually rational and feasible Groves mechanism exists. We characterize the best-in-class feasible Groves mechanism and the best-in-class individually rational Groves mechanism.

Suggested Citation

  • Efthymios Athanasiou & Santanu Dey & Giacomo Valleta, 2012. "On Sharing the Benefits of Communication," Working Papers 2012.41, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2012.41
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    References listed on IDEAS

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    1. Ginsburgh, Victor & Ortuño-Ortín, Ignacio & Weber, Shlomo, 2007. "Learning foreign languages: Theoretical and empirical implications of the Selten and Pool model," Journal of Economic Behavior & Organization, Elsevier, vol. 64(3-4), pages 337-347.
    2. Jeffrey Church & Ian King, 1993. "Bilingualism and Network Externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 337-345, May.
    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. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    6. Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-1037, September.
    7. Bailey, Martin J, 1997. "The Demand Revealing Process: To Distribute the Surplus," Public Choice, Springer, vol. 91(2), pages 107-126, April.
    8. Rajat Deb & Laura Razzolini & Tae Seo, 2006. "The conservative equal costs rule, the serial cost sharing rule and the pivotal mechanism: asymptotic welfare loss comparisons for the case of an excludable public project," Review of Economic Design, Springer;Society for Economic Design, vol. 10(3), pages 205-232, December.
    9. McAfee, R. Preston, 1992. "A dominant strategy double auction," Journal of Economic Theory, Elsevier, vol. 56(2), pages 434-450, April.
    10. Athanasiou, Efthymios, 2013. "A Solomonic solution to the problem of assigning a private indivisible good," Games and Economic Behavior, Elsevier, vol. 82(C), pages 369-387.
    11. Hervé Moulin, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 305-325.
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    More about this item

    Keywords

    Groves Mechanisms; Externality; Budget Surplus or Deficit; Pareto Undominated Mechanisms;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General

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