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Bartering Games in the Kolm Triangle

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  • MATT VAN ESSEN

Abstract

We study a public good mechanism that possesses several attractive properties. In particular, the mechanism always produces feasible allocations, induces a game where the Nash equilibria are all individually rational, and, in contrast to the voluntary contribution mechanism, supports the Lindahl allocation as a Nash equilibrium allocation. The geometric framework of the Kolm triangle is employed to illustrate the workings of the mechanism and provide intuition for the main results.

Suggested Citation

  • Matt Van Essen, 2015. "Bartering Games in the Kolm Triangle," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(3), pages 297-310, June.
    • Handle: RePEc:bla:jpbect:v:17:y:2015:i:3:p:297-310
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    File URL: http://hdl.handle.net/10.1111/jpet.12101
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    References listed on IDEAS

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    1. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
    2. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    3. Matt Van Essen, 2012. "Information complexity, punishment, and stability in two Nash efficient Lindahl mechanisms," Review of Economic Design, Springer;Society for Economic Design, vol. 16(1), pages 15-40, March.
    4. Van Essen, Matthew & Lazzati, Natalia & Walker, Mark, 2012. "Out-of-equilibrium performance of three Lindahl mechanisms: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 74(1), pages 366-381.
    5. Healy, Paul J., 2006. "Learning dynamics for mechanism design: An experimental comparison of public goods mechanisms," Journal of Economic Theory, Elsevier, vol. 129(1), pages 114-149, July.
    6. Yan Chen, 2002. "A family of supermodular Nash mechanisms implementing Lindahl allocations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 19(4), pages 773-790.
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    8. Foley, Duncan K, 1970. "Lindahl's Solution and the Core of an Economy with Public Goods," Econometrica, Econometric Society, vol. 38(1), pages 66-72, January.
    9. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    10. Matthew J. Essen, 2013. "A Simple Supermodular Mechanism that Implements Lindahl Allocations," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(3), pages 363-377, June.
    11. repec:bla:econom:v:52:y:1985:i:205:p:103-16 is not listed on IDEAS
    12. Kim, Taesung, 1993. "A stable Nash mechanism implementing Lindahl allocations for quasi-linear environments," Journal of Mathematical Economics, Elsevier, vol. 22(4), pages 359-371.
    13. , J. & ,, 2012. "Designing stable mechanisms for economic environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
    14. Guoqiang Tian, 1989. "Implementation of the Lindahl Correspondence by a Single-Valued, Feasible, and Continuous Mechanism," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(4), pages 613-621.
    15. Yan Chen & Fang-Fang Tang, 1998. "Learning and Incentive-Compatible Mechanisms for Public Goods Provision: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 633-662, June.
    16. William Thomson, 1999. "Economies with Public Goods: An Elementary Geometric Exposition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 139-176, January.
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    Cited by:

    1. Wolfgang Buchholz & Richard Cornes & Dirk Rübbelke, 2020. "Matching in the Kolm triangle: interiority and participation constraints of matching equilibria," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(5), pages 1039-1050, April.
    2. Van Essen, Matthew & Walker, Mark, 2017. "A simple market-like allocation mechanism for public goods," Games and Economic Behavior, Elsevier, vol. 101(C), pages 6-19.

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