IDEAS home Printed from https://ideas.repec.org/a/spr/jecstr/v5y2016i1d10.1186_s40008-016-0040-0.html
   My bibliography  Save this article

The MDP Procedure for public goods and local strategy proofness

Author

Listed:
  • Kimitoshi Sato

    (Tohoku University)

Abstract

This paper revisits the family of MDP Procedures and analyzes their properties. It also reviews the procedure developed by Sato (Econ Stud Q 34:97–109, 1983) which achieves aggregate correct revelation in the sense that the sum of the Nash equilibrium strategies always coincides with the aggregate value of the correct marginal rates of substitution. The procedure named the Generalized MDP Procedure can possess other desirable properties shared by continuous-time locally strategy proof planning procedures, i.e., feasibility, monotonicity and Pareto efficiency. Under myopia assumption, each player’s dominant strategy in the local incentive game associated at any iteration of the procedure is proved to reveal his/her marginal rate of substitution for a public good. In connection with the Generalized MDP Procedure, this paper analyzes the structure of the locally strategy proof procedures as algorithms and game forms. An alternative characterization theorem of locally strategy proof procedures is given by making use of the new condition, transfer independence. A measure of incentives is proposed to show that the exponent attached to the decision function of public good is characterized. A Piecewise Nonlinearized MDP Procedure is presented, which is coalitionally locally strategy proof. Equivalence between price-guided and quantity-guided procedures is also discussed.

Suggested Citation

  • Kimitoshi Sato, 2016. "The MDP Procedure for public goods and local strategy proofness," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-31, December.
    • Handle: RePEc:spr:jecstr:v:5:y:2016:i:1:d:10.1186_s40008-016-0040-0
    DOI: 10.1186/s40008-016-0040-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s40008-016-0040-0
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1186/s40008-016-0040-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Suzumura, Kotaro & Sato, Kimitoshi, 1985. "Equity and Efficiency in the Public Goods Economy : Some Counterexamples," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 26(1), pages 59-82, June.
    2. Cornet, Bernard, 1983. "Neutrality of planning procedures," Journal of Mathematical Economics, Elsevier, vol. 11(2), pages 141-160, April.
    3. Champsaur, Paul & Rochet, Jean-Charles, 1983. "On planning procedures which are locally strategy proof," Journal of Economic Theory, Elsevier, vol. 30(2), pages 353-369, August.
    4. Paul Champsaur, 1976. "Neutrality of Planning Procedures in an Economy with Public Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(2), pages 293-299.
    5. John Roberts, 1979. "Incentives in Planning Procedures for the Provision of Public Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 283-292.
    6. Henry, Claude, 1972. "Differential equations with discontinuous right-hand side for planning procedures," Journal of Economic Theory, Elsevier, vol. 4(3), pages 545-551, June.
    7. Kimitoshi Sato, 2012. "Nonmyopia and incentives in the piecewise linearized MDP procedures with variable step-sizes," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 1(1), pages 1-23, December.
    8. repec:bpj:jeehcn:v:8:y:1998:i:1:p:127-144:n:6 is not listed on IDEAS
    9. E. Malinvaud, 1972. "Prices for Individual Consumption, Quantity Indicators for Collective Consumption," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 39(4), pages 385-405.
    10. Jean-Jacques Laffont & Eric Maskin, 1983. "A Characterization of Strongly Locally Incentive Compatible Planning Procedures with Public Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(1), pages 171-186.
    11. Champsaur, Paul & Dreze, Jacques H & Henry, Claude, 1977. "Stability Theorems with Economic Applications," Econometrica, Econometric Society, vol. 45(2), pages 273-294, March.
    12. Charles E. McLure & Jr., 1968. "Welfare Maximization: The Simple Analytics with Public Goods," Canadian Journal of Economics, Canadian Economics Association, vol. 1(3), pages 633-639, August.
    13. Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, vol. 5(3), pages 419-477, December.
    14. Champsaur, Paul & Laroque, Guy, 1982. "Strategic Behavior in Decentralized Planning Procedures," Econometrica, Econometric Society, vol. 50(2), pages 325-344, March.
    15. Elaine Bennett & David Conn, 1977. "The group incentive properties of mechanisms for the provision of public goods," Public Choice, Springer, vol. 29(2), pages 95-102, March.
    16. Peter J. Hammond, 1979. "Symposium on Incentive Compatibility: Introduction," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 181-184.
    17. Chakravorti, Bhaskar, 1995. "Dynamic public goods provision with coalitional manipulation," Journal of Public Economics, Elsevier, vol. 56(1), pages 143-161, January.
    18. Yoshifumi Fujigaki & Kimitoshi Sato, 1981. "Incentives in the Generalized MDP Procedure for the Provision of Public Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 48(3), pages 473-485.
    19. Laffont, Jean-Jacques & Maskin, Eric, 1980. "A Differential Approach to Dominant Strategy Mechanisms," Econometrica, Econometric Society, vol. 48(6), pages 1507-1520, September.
    20. Guy Laroque & Jean-Charles Rochet, 1983. "Myopic Versus Intertemporal Manipulation in Decentralized Planning Procedures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(1), pages 187-195.
    21. Truchon, Michel, 1984. "Nonmyopic Strategic Behavior in the MDP Planning Procedure," Econometrica, Econometric Society, vol. 52(5), pages 1179-1189, September.
    22. CHAMPSAUR, Paul, 1976. "Neutrality of planning procedures in an economy with public goods," LIDAM Reprints CORE 264, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    23. Jouvenel Bertrand de, 1998. "De La Justice," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 8(1), pages 127-144, March.
    24. E. Malinvaud, 1971. "A Planning Approach to the Public Good Problem," Palgrave Macmillan Books, in: Peter Bohm & Allen V. Kneese (ed.), The Economics of Environment, pages 77-93, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kimitoshi Sato, 2012. "Nonmyopia and incentives in the piecewise linearized MDP procedures with variable step-sizes," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 1(1), pages 1-23, December.
    2. JOHN McMILLAN, 1979. "The Free‐Rider Problem: A Survey," The Economic Record, The Economic Society of Australia, vol. 55(2), pages 95-107, June.
    3. Monique Florenzano, 2009. "Walras-Lindahl-Wicksell: What equilibrium concept for public goods provision," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00531434, HAL.
    4. Spagat, M., 1995. "Leaving some stones unturned: A reassessment of iterative planning theory," Journal of Public Economics, Elsevier, vol. 58(1), pages 85-105, September.
    5. Chakravorti, Bhaskar, 1995. "Dynamic public goods provision with coalitional manipulation," Journal of Public Economics, Elsevier, vol. 56(1), pages 143-161, January.
    6. Monique Florenzano, 2009. "Walras-Lindahl-Wicksell: What equilibrium concept for public goods provision ? I - The convex case," Post-Print halshs-00367867, HAL.
    7. Jacques H. Drèze & Charles Figuières & Jean Hindriks, 2006. "Voluntary Matching Grants Can Forestall Social Dumping," CESifo Working Paper Series 1867, CESifo.
    8. Kazuhiko Hashimoto & Hiroki Saitoh, 2010. "Domain expansion of the pivotal mechanism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(3), pages 455-470, March.
    9. Ledyard, John O., "undated". "Public Goods: A Survey of Experimental Research," Working Papers 861, California Institute of Technology, Division of the Humanities and Social Sciences.
    10. Boyer, Marcel & Dagenais, Marcel G. & Salvas-Bronsard, Lise, 1989. "L’empreinte de MalinvaudMélanges économiques. Essais en l’honneur de Edmond Malinvaud, Economica, Paris, 1988 (1092 pages)," L'Actualité Economique, Société Canadienne de Science Economique, vol. 65(2), pages 263-296, juin.
    11. Chander, Parkash & Tulkens, Henry, 2006. "Cooperation, Stability and Self-Enforcement in International Environmental Agreements: A Conceptual Discussion," Coalition Theory Network Working Papers 12170, Fondazione Eni Enrico Mattei (FEEM).
    12. de Trenqualye, Pierre, 1995. "Incentive compatibility without compensation," Economics Letters, Elsevier, vol. 47(1), pages 35-39, January.
    13. Monique Florenzano, 2010. "Government and the provision of public goods:from equilibrium models to mechanismdesign," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 17(4), pages 1047-1077.
    14. Susan Cohen, 1986. "Truth-telling, dominant strategies, and iterative Groves mechanisms," Public Choice, Springer, vol. 51(3), pages 333-343, January.
    15. Charles Figuières & Stéphanie Aulong & Robert Lifran, 2005. "Negotiation Processes for the Protection of Biodiversity," IDEP Working Papers 0505, Institut d'economie publique (IDEP), Marseille, France, revised May 2005.
    16. Jacques H. Drèze & Charles Figuieres & Jean Hindriks, 2007. "Can Federal Grants Mitigate Social Competition?," CESifo Economic Studies, CESifo Group, vol. 53(4), pages 596-617, December.
    17. Peter J. Hammond & Antonio Villar, 1998. "Efficiency with Non‐Convexities: Extending the “Scandinavian Consensus” Approaches," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 11-32, March.
    18. Jean-Jacques Laffont, 1982. "Information imparfaite et économie publique," Revue Économique, Programme National Persée, vol. 33(1), pages 5-29.
    19. Shlomo Weber & Hans Wiesmeth, 1990. "On the theory of cost sharing," Journal of Economics, Springer, vol. 52(1), pages 71-82, February.
    20. Maarten Hillebrandt, 2017. "Transparency as a Platform for Institutional Politics: The Case of the Council of the European Union," Politics and Governance, Cogitatio Press, vol. 5(3), pages 62-74.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jecstr:v:5:y:2016:i:1:d:10.1186_s40008-016-0040-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.