Econometric Society 57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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BIDDING FOR THE SURPLUS: REALIZING EFFICIENT OUTCOMES IN GENERAL ECONOMIC ENVIRONMENTS


Category: Economic Theory
Mechanism Design
Sunday 25th August 2002, 09:30 - 11:00, Room: 4.6
Session Chair(s): David Wettstein, Ben Gurion University, ISRAEL

Presenter(s): Wettstein, David

Co-Author(s): Mutuswami, Suresh and Pérez-Castrillo, David

Keyword(s): bidding mechanism, efficiency, local public goods, networks

JEL(s): C72, D78, H41

Abstract:

In this paper, we consider two classes of economic environments. In the first type, agents are faced with the task of providing local public goods that will benefit some or all of them. In the second type, economic activity takes place via formation of links. Agents need to both form a network and to decide how to share the output generated. For both scenarios, we suggest a bidding mechanism whereby agents bid for the right to decide upon the organization of economic activity. The subgame perfect equilibria of this game generate efficient outcomes.


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Paper Reference Number: 1089

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57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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