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The Existence of Efficient and Incentive Compatible Equilibria with Public Goods

Groves, Theodore and Ledyard, John O. (1978) The Existence of Efficient and Incentive Compatible Equilibria with Public Goods. Social Science Working Paper, 203. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20171020-165624169

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Abstract

In our previous paper, "Optimal Allocation of Public Goods...," (1977) we presented a mechanism for determining efficient public goods allocations when preferences are unknown and consumers are free to misrepresent their demands for public goods. We proved the basic welfare theorem for this model: If consumers are competitive in markets for private goods and follow Nash behavior in their choice of demands to report to the mechanism, then equilibria will be Pareto optimal. In this paper we show this result is not vacuous by proving that an equilibria will be Pareto optimal. In this paper we show this result is not vacuous by proving that an equilibrium will exist for a wide class of economies. Our conditions are slightly stronger than those required to prove the existence of a Lindahl equilibrium. In order to rule out the possibility of bankruptcy, we assume additionally that at all Pareto optimal allocations, private goods consumption is bounded away from zero.


Item Type:Report or Paper (Working Paper)
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URLURL TypeDescription
http://resolver.caltech.edu/CaltechAUTHORS:20171121-142550221Related ItemPublished Article
Additional Information:This work was supported in part by National Science Foundation Grant SOC77-06000 at the Institute for Mathematical Studies in the Social Sciences, Stanford University, in part by NSF Grant SOC76-20953 at the Center for Mathematical Studies in Economics and Management Science, Northwestern University, and a Fairchild Foundation Grant at the California Institute of Technology. This paper is a revision of one referenced as "[16]" in our earlier paper (referenced herein as Groves and Ledyard [1977]). Published as Groves, Theodore, and John O. Ledyard. "The existence of efficient and incentive compatible equilibria with public goods." Econometrica: Journal of the Econometric Society (1980): 1487-1506.
Group:Social Science Working Papers
Funders:
Funding AgencyGrant Number
NSFSOC76-20953
NSFSOC76-20953
Sherman Fairchild FoundationUNSPECIFIED
Subject Keywords:Public goods, Consumer bankruptcy, Consumer goods, Taxes, Private goods, Consumer equilibrium, Economic theory, Consumer prices, Consumer economics, Consumer choice
Series Name:Social Science Working Paper
Issue or Number:203
Record Number:CaltechAUTHORS:20171020-165624169
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20171020-165624169
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82563
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:24 Oct 2017 21:54
Last Modified:03 Oct 2019 18:55

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