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Implementation of balanced linear cost share equilibrium solution in Nash and strong Nash equilibria

Authors
Journal
Journal of Public Economics
0047-2727
Publisher
Elsevier
Publication Date
Volume
76
Issue
2
Identifiers
DOI: 10.1016/s0047-2727(99)00041-9
Keywords
  • Mechanism Design
  • Incentives
  • Double Implementation
  • Balanced Linear Cost Share Equilibrium
  • Public Goods Economies

Abstract

Abstract This paper considers the incentive aspect of the Balanced Linear Cost Share Equilibrium (BLCSE), which yields an endogenous theory of profit distribution for public goods economies with convex production technologies. We do so by presenting an incentive compatible mechanism which doubly implements the BLCSE solution in Nash and strong Nash equilibria so that Nash allocations and strong Nash allocations coincide with BLCSE allocations. The mechanism presented here allows not only preferences and initial endowments, but also coalition patterns to be privately observed. In addition, it works not only for three or more agents, but also for two-agent economies.

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