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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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    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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