A decentralized and informationally efficient mechanism realizing fair outcomes in economies with public goods |
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Authors: | Jose Aizpurua Antonio Manresa |
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Institution: | (1) Nafarroak Unibertsitate Publikoa, Universidad Pública de Navarra, Campus de Arrosadia, 31006 Pamplona, Spain;(2) Departament de Teoria Econòmica, Universitat de Barcelona, Avda. Diagonal, 690, 08034 Barcelona, Spain |
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Abstract: | We present a decentralized mechanism (called Lindahl Egalitarian), which yields Pareto efficient and envy free allocations
(i.e. fair outcomes). We show that the mechanism is informationally efficient in general production economies with an arbitrary,
but finite, number of private and public goods, and a finite number of agents. The mechanism reduces to the Walrasian mechanism
starting from equal wealth when no agent cares about public goods. We also prove that the set of Public Competitive equilibrium
allocations (from equal endowments and proportional taxation), and the set of the Lindahl Egalitarian equilibrium allocations
are the same.
We are grateful to Xavier Calsamiglia and Albert Marcet for helpful conversations, and to A. de la Fuente, I. Macho, and an
anonimous referee for useful suggestions. A. Manresa’s research has been supported by the grant CICYT PB90-0172. J. Aizpurua
acknowledges financial support from the Government of Navarra. |
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Keywords: | Mechanism design Fair allocations Public goods |
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