IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

On the Informational Requirements of Decentralized Pareto-Satisfactory Mechanisms in Economies with Increasing Returns

  • Tian, Guoqiang

This paper investigates the dimension requirements of informationally decentralized Pareto-satisfactory processes in production economies with increasing returns to scale or more general types of non-convexities. We show that the marginal cost pricing (MCP) mechanism is informationally effcient over the class of non-convex production economies where MCP equilibrium allocations are Pareto effcient. We then discuss the informational requirements of realizing Pareto effcient allocations for a general class of non-convex production economies. We do so by examining the dimension of the message space of the marginal cost pricing mechanism with transfers. Since the set of marginal cost pricing equilibrium allocations with transfers contains Pareto effcient allocations as a subset for every economy under consideration, Pareto e±cient allocations can be realized through the MCP mechanism with transfers, which is informationally decentralized and has a finite-dimensional message space. This result is sharply contrasted to the impossibility result given in Calsamigla (1977).

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: http://mpra.ub.uni-muenchen.de/41226/1/MPRA_paper_41226.pdf
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41226.

as
in new window

Length:
Date of creation: 2004
Date of revision: Oct 2006
Handle: RePEc:pra:mprapa:41226
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Xavier Calsamiglia & Alan Kirman, 1991. "A unique informationally efficient and decentralized mechanism with fair outcomes," Economics Working Papers 7, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Hurwicz, Leonid, 1973. "The Design of Mechanisms for Resource Allocation," American Economic Review, American Economic Association, vol. 63(2), pages 1-30, May.
  3. Hurwicz, Leonid, 1979. "On allocations attainable through Nash equilibria," Journal of Economic Theory, Elsevier, vol. 21(1), pages 140-165, August.
  4. BONNISSEAU, Jean-Marc & CORNET, Bernard, . "Existence of equilibria when firms follow bounded losses pricing rules," CORE Discussion Papers RP -814, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Stefan Reichelstein & Stanley Reiter, 1985. "Game Forms with Minimal Strategy Spaces," Discussion Papers 663, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Bonnisseau, Jean-Marc, 1988. "On two existence results of equilibria in economies with increasing returns," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 193-207, April.
  7. Sato, Fumitaka, 1981. "On the informational size of message spaces for resource allocation processes in economies with public goods," Journal of Economic Theory, Elsevier, vol. 24(1), pages 48-69, February.
  8. Calsamiglia, Xavier, 1977. "Decentralized resource allocation and increasing returns," Journal of Economic Theory, Elsevier, vol. 14(2), pages 263-283, April.
  9. Cornet, Bernard, 1988. "General equilibrium theory and increasing returns : Presentation," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 103-118, April.
  10. Hurwicz, Leonid, 1999. " Revisiting Externalities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(2), pages 225-45.
  11. Williams, Steven R, 1986. "Realization and Nash Implementation: Two Aspects of Mechanism Design," Econometrica, Econometric Society, vol. 54(1), pages 139-51, January.
  12. Kenneth Mount & Stanley Reiter, 1973. "The Informational Size of Message Spaces," Discussion Papers 3, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  13. Walker, Mark, 1977. "On the informational size of message spaces," Journal of Economic Theory, Elsevier, vol. 15(2), pages 366-375, August.
  14. Eric Maskin, 1998. "Nash Equilibrium and Welfare Optimality," Harvard Institute of Economic Research Working Papers 1829, Harvard - Institute of Economic Research.
  15. Takashi Ishikida & Thomas Marschak, 1996. "Mechanisms that efficiently verify the optimality of a proposed action," Review of Economic Design, Springer, vol. 2(1), pages 33-68, December.
  16. Osana, Hiroaki, 1978. "On the informational size of message spaces for resource allocation processes," Journal of Economic Theory, Elsevier, vol. 17(1), pages 66-78, February.
  17. Vohra, Rajiv, 1988. "On the existence of equilibria in economies with increasing returns," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 179-192, April.
Full references (including those not matched with items on IDEAS)

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:pra:mprapa:41226. 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: (Ekkehart Schlicht)

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.