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Gale's Fixed Tax for Exchanging Houses

Author

Listed:
  • Andersson, Tommy

    (Department of Economics, Lund University)

  • Ehlers, Lars

    (Département de sciences économiques, Université de Montréal)

  • Svensson, Lars-Gunnar

    (Department of Economics, Lund University)

  • Tierney, Ryan

    (Institute of Business and Economics, University of Southern Denmark)

Abstract

We consider taxation of exchanges among a set of agents where each agent owns one object. Agents may have different valuations for the objects and they need to pay taxes for exchanges. We show that if a rule satisfies individual rationality, strategyproofness, constrained efficiency, weak anonymity and weak consistency, then it is either the no-trade rule or a fixed-tax core rule. For the latter rules, whenever any agent exchanges his object, he pays the same fixed tax (a lump sum payment which is identical for all agents) independently of which object he consumes. Gale's top trading cycles algorithm finds the final assignment using the agents' valuations adjusted with the fixed tax if the induced preferences are strict.

Suggested Citation

  • Andersson, Tommy & Ehlers, Lars & Svensson, Lars-Gunnar & Tierney, Ryan, 2018. "Gale's Fixed Tax for Exchanging Houses," Working Papers 2018:17, Lund University, Department of Economics, revised 06 Apr 2021.
    • Handle: RePEc:hhs:lunewp:2018_017
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Fixed Tax; Exchanges; Top Trading;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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