Efficient Bidding with Externalities

Ines Macho-Stadler (), 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: We implement a family of efficient proposals to share benefits generated in environments with externalities. These proposals extend the Shapley value to games with externalities and are parametrized through the method by which the externalities are averaged. We construct two slightly different mechanisms: one for environments with negative externalities and the other for positive externalities. We show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals.

Keywords: Implementation; Externalities; Bidding; Shapley Value. (search for similar items in EconPapers)
JEL-codes: D62 C71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-mic
Date: 2005-02-10
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Journal Article: Efficient bidding with externalities (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:aub:autbar:641.05

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