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.
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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. | ||||||||||||
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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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