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On Sharing the Benefits of Communication

  • Athanasiou Efthymios
  • Dey Santanu
  • Valletta Giacomo


We put forward a model of private goods with externalities. Agents derive benefit fromcommunicating 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 Grovesmechanism exists. We characterize the best-in-class feasible Groves mechanism and thebest-in-class individually rational Groves mechanism.

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Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 016.

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Date of creation: 2012
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Handle: RePEc:unm:umamet:2012016
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  1. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
  2. Victor Ginsburgh & Ignacio Ortuno-Ortin & Shlomo Weber, 2007. "Learning foreign languages: theoretical and empirical implications of the Selten and Pool model," ULB Institutional Repository 2013/7274, ULB -- Universite Libre de Bruxelles.
  3. McAfee, R. Preston, 1992. "A dominant strategy double auction," Journal of Economic Theory, Elsevier, vol. 56(2), pages 434-450, April.
  4. Jeffrey Church & Ian King, 1993. "Bilingualism and Network Externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 337-45, May.
  5. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
  6. Bailey, Martin J, 1997. "The Demand Revealing Process: To Distribute the Surplus," Public Choice, Springer, vol. 91(2), pages 107-26, April.
  7. Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-37, September.
  8. Moulin, H., 1986. "Characterizations of the pivotal mechanism," Journal of Public Economics, Elsevier, vol. 31(1), pages 53-78, October.
  9. Moulin, Hervé, 2009. "Almost budget-balanced VCG mechanisms to assign multiple objects," Journal of Economic Theory, Elsevier, vol. 144(1), pages 96-119, January.
  10. 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.
  11. 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.
  12. Holmstrom, Bengt, 1979. "Groves' Scheme on Restricted Domains," Econometrica, Econometric Society, vol. 47(5), pages 1137-44, September.
  13. 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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