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Maximizing social welfare in congestion games via redistribution

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  • Naroditskiy, Victor
  • Steinberg, Richard

Abstract

It is well known that efficient use of congestible resources can be achieved via marginal pricing; however, payments collected from the agents generate a budget surplus, which reduces social welfare. We show that an asymptotically first-best solution in the number of agents can be achieved by the appropriate redistribution of the budget surplus back to the agents.

Suggested Citation

  • Naroditskiy, Victor & Steinberg, Richard, 2015. "Maximizing social welfare in congestion games via redistribution," Games and Economic Behavior, Elsevier, vol. 93(C), pages 24-41.
    • Handle: RePEc:eee:gamebe:v:93:y:2015:i:c:p:24-41
    DOI: 10.1016/j.geb.2015.06.010
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    References listed on IDEAS

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    1. Bailey, Martin J, 1997. "The Demand Revealing Process: To Distribute the Surplus," Public Choice, Springer, vol. 91(2), pages 107-126, April.
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    4. de Clippel, Geoffroy & Naroditskiy, Victor & Polukarov, Maria & Greenwald, Amy & Jennings, Nicholas R., 2014. "Destroy to save," Games and Economic Behavior, Elsevier, vol. 86(C), pages 392-404.
      • Geoffroy de Clippel & Louis Putterman & Victor Naroditskiy & Maria Polukarov & Amy Greenwald & Nicholas R. Jennings, 2012. "Destroy to Save," Working Papers 2012-9, Brown University, Department of Economics.
    5. Patrick Maillé & Nicolás E. Stier-Moses, 2009. "Eliciting Coordination with Rebates," Transportation Science, INFORMS, vol. 43(4), pages 473-492, November.
    6. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-260, May.
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    9. Moulin, Hervé, 2009. "Almost budget-balanced VCG mechanisms to assign multiple objects," Journal of Economic Theory, Elsevier, vol. 144(1), pages 96-119, January.
    10. Guo, Mingyu & Conitzer, Vincent, 2009. "Worst-case optimal redistribution of VCG payments in multi-unit auctions," Games and Economic Behavior, Elsevier, vol. 67(1), pages 69-98, September.
    11. Adler, Jeffrey L. & Cetin, Mecit, 2001. "A direct redistribution model of congestion pricing," Transportation Research Part B: Methodological, Elsevier, vol. 35(5), pages 447-460, June.
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    Cited by:

    1. Lindsey, Robin & de Palma, André & Silva, Hugo E., 2019. "Equilibrium in a dynamic model of congestion with large and small users," Transportation Research Part B: Methodological, Elsevier, vol. 124(C), pages 82-107.

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    More about this item

    Keywords

    Redistribution mechanisms; Congestion; VCG;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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