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Envy-free allocation of indivisible goods with money and externalities

Author

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  • Satoshi Nakada

    (Graduate School of Economics, Hitotsubashi University)

Abstract

This paper considers an envy-free allocation of a single indivisible good in the quasi-linear utility environment where a monetary transfer is allowed and externalities among agents exist. We show that an envy-free allocation does not exist if a degree of the externalities is high enough and there are two groups of agents: one group of agents can but the other group of agents cannot enjoy externalities. We also show that both efficient allocations and envy-free allocations are generally incompatible whereas they are always compatible without externalities.

Suggested Citation

  • Satoshi Nakada, 2018. "Envy-free allocation of indivisible goods with money and externalities," Economics Bulletin, AccessEcon, vol. 38(1), pages 52-59.
    • Handle: RePEc:ebl:ecbull:eb-17-00267
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2018/Volume38/EB-18-V38-I1-P6.pdf
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    References listed on IDEAS

    as
    1. Svensson, Lars-Gunnar, 1983. "Large Indivisibles: An Analysis with Respect to Price Equilibrium and Fairness," Econometrica, Econometric Society, vol. 51(4), pages 939-954, July.
    2. Thomson, William, 1990. "On the non existence of envy-free and egalitarian-equivalent allocations in economies with indivisibilities," Economics Letters, Elsevier, vol. 34(3), pages 227-229, November.
    3. Koichi Tadenuma, 1996. "Trade-off between equity and efficiency in a general economy with indivisible goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(4), pages 445-450.
    4. Toyotaka Sakai, 2012. "Fair waste pricing: an axiomatic analysis to the NIMBY problem," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 499-521, June.
    5. Yuji Fujinaka & Toyotaka Sakai, 2009. "The positive consequence of strategic manipulation in indivisible good allocation," International Journal of Game Theory, Springer;Game Theory Society, vol. 38(3), pages 325-348, November.
    6. Tadenuma, Koichi & Thomson, William, 1993. "The fair allocation of an indivisible good when monetary compensations are possible," Mathematical Social Sciences, Elsevier, vol. 25(2), pages 117-132, February.
    7. Tadenuma, Koichi & Thomson, William, 1991. "No-Envy and Consistency in Economies with Indivisible Goods," Econometrica, Econometric Society, vol. 59(6), pages 1755-1767, November.
    8. Velez, Rodrigo A., 2016. "Fairness and externalities," Theoretical Economics, Econometric Society, vol. 11(1), January.
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    Cited by:

    1. Obara Takuya & Tsugawa Shuichi, 2019. "Public Good Provision Financed by Nonlinear Income Tax Under Reduction of Envy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-16, October.

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    More about this item

    Keywords

    envy-free allocation; indivisible goods; network; externality;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics

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