Bidding for the Surplus: Realizing Efficient Outcomes in General Economic Environments

Suresh Mutuswami, David Perez-Castrillo () and David Wettstein

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: In this paper, we consider two classes of economic environments. In the first type, agents are faced with the task of providing local public goods that will benefit some or all of them. In the second type, economic activity takes place via formation of links. Agents need both to both form a network and decide how to share the output generated. For both scenarios, we suggest a bidding mechanism whereby agents bid for the right to decide upon the organization of the economic activity. The subgame perfect equilibria of this game generate efficient outcomes.

Keywords: Bidding; Implementation; Networks; Public goods (search for similar items in EconPapers)
JEL-codes: C71 C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-net
Date: 2001-02-26
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Persistent link: http://EconPapers.repec.org/RePEc:aub:autbar:479.01

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