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The Unique Informational Effciency of the Lindahl Allocation Process in Economies with Public Goods

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  • Tian, Guoqiang

Abstract

This paper investigates the informational requirements of resource allocation processes in public goods economies with any number of firms and commodities. We show that the Lindahl mechanism is informationally effcient in the sense that it uses the smallest message space among smooth resource allocation processes that are informationally decentralized and realize Pareto optimal allocations over the class of public goods economies where Lindahl equilibria exist. Furthermore, we show that the Lindahl mechanism is the unique informationally effcient decentralized mechanism that realizes Pareto effcient and individually rational allocations in public goods economies with Cobb-Douglas utility functions and quadratic production functions.

Suggested Citation

  • Tian, Guoqiang, 2001. "The Unique Informational Effciency of the Lindahl Allocation Process in Economies with Public Goods," MPRA Paper 41229, University Library of Munich, Germany, revised Oct 2005.
  • Handle: RePEc:pra:mprapa:41229
    as

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    File URL: https://mpra.ub.uni-muenchen.de/41229/1/MPRA_paper_41229.pdf
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    References listed on IDEAS

    as
    1. Walker, Mark, 1977. "On the informational size of message spaces," Journal of Economic Theory, Elsevier, vol. 15(2), pages 366-375, August.
    2. Calsamiglia, Xavier & Kirman, Alan, 1993. "A Unique Informationally Efficient and Decentralized Mechanism with Fair Outcomes," Econometrica, Econometric Society, vol. 61(5), pages 1147-1172, September.
    3. Mount, Kenneth & Reiter, Stanley, 1974. "The informational size of message spaces," Journal of Economic Theory, Elsevier, vol. 8(2), pages 161-192, June.
    4. Hurwicz, Leonid, 1999. " Revisiting Externalities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(2), pages 225-245.
    5. Hurwicz, Leonid, 1979. "On allocations attainable through Nash equilibria," Journal of Economic Theory, Elsevier, vol. 21(1), pages 140-165, August.
    6. 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.
    7. Calsamiglia, Xavier, 1977. "Decentralized resource allocation and increasing returns," Journal of Economic Theory, Elsevier, vol. 14(2), pages 263-283, April.
    8. Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, vol. 5(3), pages 419-477, December.
    9. Tian, Guoqiang, 1990. "Completely feasible and continuous implementation of the Lindahl correspondence with a message space of minimal dimension," Journal of Economic Theory, Elsevier, vol. 51(2), pages 443-452, August.
    10. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Informational Effciency; Lindahl Allocation Process; Public Goods;

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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