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The existence of efficient and incentive compatible equilibria with public goods

Groves, Theodore and Ledyard, John O. (1980) The existence of efficient and incentive compatible equilibria with public goods. Econometrica, 48 (6). pp. 1487-1506. ISSN 1468-0262. doi:10.2307/1912820. https://resolver.caltech.edu/CaltechAUTHORS:20171121-142550221

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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:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.2307/1912820DOIArticle
http://www.jstor.org/stable/1912820JSTORArticle
http://resolver.caltech.edu/CaltechAUTHORS:20171020-165624169Related ItemWorking Paper
Additional Information:© 1980 The Econometric Society. This paper is a revision of reference [16] in our earlier paper, Groves and Ledyard (1977). We gratefully acknowledge support by National Science Foundation Grants SOC775-21820 and SOC76-20953 and a Fairchild Foundation Grant at California Institute of Technology where Ledyard was a Fairchild Scholar. We also would like to thank the referees and Michael Rothschild whose notes (1976) and comments prompted us to complete this work. All errors are, of course, our own. Formerly SSWP 203.
Funders:
Funding AgencyGrant Number
NSFSOC76-20953
NSFSOC775-21820
Sherman Fairchild FoundationUNSPECIFIED
Subject Keywords:Public goods, Consumer bankruptcy, Consumer goods, Taxes, Private goods, Consumer equilibrium, Economic theory, Consumer prices, Consumer economics, Consumer choice
Issue or Number:6
DOI:10.2307/1912820
Record Number:CaltechAUTHORS:20171121-142550221
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20171121-142550221
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:83407
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:21 Nov 2017 22:36
Last Modified:15 Nov 2021 19:57

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