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A Simple Supermodular Mechanism that Implements Lindahl Allocations

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  • Van Essen, Matthew J.

Abstract

This paper introduces a new incentive compatible mechanism which for general preference environments implements Lindahl allocations as Nash equilibria. The mechanism does not increase in structural complexity as consumers are added to the economy, the minimum dimension of data needed to compute payoffs is smaller than other mechanisms with comparable properties; and for quasi-linear environments, the mechanism induces a supermodular game for appropriate choices of the mechanism parameters. Thus, this new Lindahl mechanism provides a connection between the desirable welfare properties of Lindahl allocations and the desirable theoretical/ convergence properties of supermodular games.

Suggested Citation

  • Van Essen, Matthew J., 2008. "A Simple Supermodular Mechanism that Implements Lindahl Allocations," MPRA Paper 12781, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:12781
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    References listed on IDEAS

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    16. Yan Chen & Fang-Fang Tang, 1998. "Learning and Incentive-Compatible Mechanisms for Public Goods Provision: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 633-662, June.
    17. Healy, Paul J., 2006. "Learning dynamics for mechanism design: An experimental comparison of public goods mechanisms," Journal of Economic Theory, Elsevier, vol. 129(1), pages 114-149, July.
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    Citations

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    Cited by:

    1. Matt Van Essen, 2012. "A note on the stability of Chen’s Lindahl mechanism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(2), pages 365-370, February.
    2. , J. & ,, 2012. "Designing stable mechanisms for economic environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
    3. Hassan Benchekroun & Charles Figuières & Mabel Tidball, 2016. "Implementation of the Lindahl Correspondance via Simple Indirect Mechanisms," Working Papers halshs-01378460, HAL.
    4. Matt Essen, 2014. "A Clarke tax tâtonnement that converges to the Lindahl allocation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(2), pages 309-327, August.
    5. Matt Van Essen, 2012. "Information complexity, punishment, and stability in two Nash efficient Lindahl mechanisms," Review of Economic Design, Springer;Society for Economic Design, vol. 16(1), pages 15-40, March.

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    More about this item

    Keywords

    Lindahl Equilibrium; Nash Implementation; Supermodular Games;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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