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Overcoming Participation Constraints

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Abstract

This paper shows that linking a sufficiently large number of independent but unrelated social decisions can achieve approximate efficiency. We provide regularity conditions under which a Groves mechanism amended with a veto game implements an efficient outcome with probability arbitrarily close to one, and satisfies interim participation, incentive and resource constraints.

Suggested Citation

  • Hanming Fang & Peter Norman, 2005. "Overcoming Participation Constraints," Cowles Foundation Discussion Papers 1511R, Cowles Foundation for Research in Economics, Yale University, revised Apr 2006.
    • Handle: RePEc:cwl:cwldpp:1511r
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    1. Börgers, Tilman & Postl, Peter, 2009. "Efficient compromising," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2057-2076, September.
    2. Peter Norman, 2004. "Efficient Mechanisms for Public Goods with Use Exclusions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(4), pages 1163-1188.
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    6. Casella, Alessandra, 2005. "Storable votes," Games and Economic Behavior, Elsevier, vol. 51(2), pages 391-419, May.
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    8. Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany.
    9. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
    10. Norman,P., 2000. "Efficient mechanisms for public goods with use exclusions," Working papers 15, Wisconsin Madison - Social Systems.
    11. Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
    12. Mark Armstrong, 1999. "Price Discrimination by a Many-Product Firm," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 151-168.
    13. Börgers, Tilman & Postl, Peter, 2009. "Efficient compromising," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2057-2076, September.
    14. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-737, September.
    15. Paul R. Milgrom & Robert J. Weber, 1985. "Distributional Strategies for Games with Incomplete Information," Mathematics of Operations Research, INFORMS, vol. 10(4), pages 619-632, November.
    16. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Tilman Börgers & Peter Norman, 2009. "A note on budget balance under interim participation constraints: the case of independent types," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 39(3), pages 477-489, June.
    2. Rafael Hortala-Vallve, 2010. "Inefficiencies on linking decisions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(3), pages 471-486, March.
    3. Hitoshi Matsushima & Koichi Miyazaki & Nobuyuki Yagi, 2006. "Role of Linking Mechanisms in Multitask Agency with Hidden Information ( Revised as CARF-F-209(2010) )," CARF F-Series CARF-F-059, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    4. Grüner, Hans Peter & Koriyama, Yukio, 2012. "Public goods, participation constraints, and democracy: A possibility theorem," Games and Economic Behavior, Elsevier, vol. 75(1), pages 152-167.
    5. Matsushima, Hitoshi & Miyazaki, Koichi & Yagi, Nobuyuki, 2010. "Role of linking mechanisms in multitask agency with hidden information," Journal of Economic Theory, Elsevier, vol. 145(6), pages 2241-2259, November.
    6. Grüner, Hans Peter, 2008. "Public goods, participation constraints, and democracy: A possibility theorem," CEPR Discussion Papers 7066, C.E.P.R. Discussion Papers.
    7. Bierbrauer, Felix & Winkelmann, Justus, 2020. "All or nothing: State capacity and optimal public goods provision," Journal of Economic Theory, Elsevier, vol. 185(C).

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    More about this item

    Keywords

    Linking; Participation Constraints; Groves Mechanisms; Veto Power;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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