Implementation of linear cost share equilibrium allocations.

The writer examines incentive aspects of the Linear Cost Share Equilibrium principle by designing mechanisms whose Nash allocations coincide with Linear Cost Share equilibrium allocations. The mechanisms presented permit not only preferences but also initial endowments to be privately observed, a c...

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Bibliographic Details
Published in:Journal of Economic Theory Vol. 64; pp. 568 - 585
Main Author: Tian, Guoqiang
Format: Article
Published: Academic Press Inc. December 1994
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Online Access:View this record in EBSCOhost
Description
Summary:The writer examines incentive aspects of the Linear Cost Share Equilibrium principle by designing mechanisms whose Nash allocations coincide with Linear Cost Share equilibrium allocations. The mechanisms presented permit not only preferences but also initial endowments to be privately observed, a characteristic that is missing from much recent work in implementation theory. Mechanisms for both the withholding and destruction of endowments are provided. It is noted that if the commodity space is reinterpreted, the mechanisms also implement Walrasian allocations to economics with purely private goods. It is argued that these mechanisms are sufficiently general to cover Walrasian equilibria, Lindahl equilibria, and cost share equilibria, that is, they seem to represent “generic” mechanisms to implement competitive-type allocations in private and public goods economies.